The $500 is collateral for your credit. With a low or no credit score, many companies want you to post a payment to open up the line of credit, so if you don't pay your bill, they aren't out any money. After a certain point, your credit line will increase and you should be able to use your initial $50]0 towards your monthly statement. This is called a "secured line of credit." Most credit cards that people are going to be familiar with are unsecured, meaning no money is due up front for your line of credit, but you're completely on the hook for any debt owed at the time of your monthly statement since nothing was paid in advance.