To understand how to use them:
There are two types of credit cards: secured and unsecured.
Secured means that the bank/company is not responsible for the line of credit (meaning the money you borrow is from yourself). This is where they usually require a security deposit. Usually around 200 to 300 dollars minimum.
This deposit is determines the credit limit. 200 dollar deposit equals 200 dollar credit limit. This type of credit card is almost always granted to anyone with little or poor credit history.
Unsecured is the other type. This type of credit is what it means. You can charge any amount on this type of credit, borrowing from the bank to do so. It's a risky one to use if you're not responsible with your use. Most financial advisers strongly suggest not using more than what you can pay in full unless in an emergency. So if you know that you can pay off, say, a 400 dollar charge before the 30 days are up, go ahead. The other tip is always keep your credit card debt at least no more than 10% of your total credit limit.
This kind of credit is not offered to just anyone. It actually depends on how good your credit score is or at least your history with the bank. For example, you have been on a secured line of credit for at least six months. The bank may then upgrade you to an unsecured card. Remember to pay in full and ON TIME. That is the key to building your credit (usually the biggest point in obtaining a credit card; and by far one of the easiest ways to do so).
And to address that other question why some people have a lot of credit cards, mostly it's the easy access and secured use. But it's also used as leverage when one of their older accounts is closed. To explain why, think of it as each card as a number. All the numbers is averaged together to get your credit score. Which is why whenever you close an account or open a new one (credit/debit), it lowers your overall average at first. Because you have started a new account with little history.
Hopefully I didn't error somewhere here but secured credit cards are the way to go if you have no credit or bad credit. Pay on time and in FULL. Your credit limit is based on how much your security deposit is. With enough credit history (in terms of at least six months or more), you can upgrade to an unsecured credit card. That means that the bank in question considers you an acceptable risk to lend you money (a line of unlimited credit).
