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While credit cards help you easily manage financial transactions, you must meet certain eligibility parameters to be eligible for them. A good credit score is one such term, and it isn’t easy to have a score above 750. That’s exactly where secured credit cards come into play, as they require you to pledge a deposit as collateral. In case you have a poor credit score or a low credit history, you can easily get this card.

How does a Secured Credit Card Work?

Secured credit cards function like regular cards but instead require a cash deposit upfront, which is refundable. Credit card issuers who are typically reluctant to offer card to users with no or poor credit history, would allow users to get a secured credit card backed by a security, like fixed deposit.


This serves as your credit limit and cannot be exceeded unless you top up your deposit. Using a secured credit card regularly and making timely payments helps build your credit history. On meeting your issuer’s requirements, you may be eligible for a regular credit card and get your deposit back.

Difference Between a Secured Credit Card and a Prepaid Credit Card 

You may get confused between a secured and a prepaid credit card. While a secured credit card operates against collateral, a prepaid credit card functions similar to a gift card. 


Here are the main differentiating factors: 

Secured Credit Card

Prepaid Credit Card

A secured credit card is issued against a collateral

No collateral is needed when issuing a prepaid credit card

Funds are not pre-loaded in the card

Funds are pre-loaded in the card

Usually acquired by people with a zero-credit history or very poor credit score

Any customer can apply

Threat of incurring debt or losing collateral if payments are not made on time

Relatively safe since you can only transact up to the prepaid limit on the card 

Features and Benefits of a Secured Credit Card

Online/In-store acceptance

These credit cards can be used for online and offline purchases across various merchants and platforms. 

High Approval Chance

Secured credit cards invite higher chances of approval since the card brings an associated collateral with it. 

Aids in transitioning to a regular credit card

Such credit cards can be used as preparation grounds for unsecured credit cards since it can help you achieve a considerable credit score.

Earn interest on your card

Depending on the bank, you can earn interest on the collateral offered against this credit card. 

Grace Period

If your credit card payments are due, you can get a grace period (depending on the issuer), giving you extra time to arrange for funds. 

Pros & Cons of a Secured Credit Card

Similar to a regular credit card, a secured card also has its share of advantages and disadvantages. Here’s a quick preview of the pros and cons of such a credit card.



Secured credit cards can be acquired even if you don’t have any income

The credit limit of thes cards is usually low

Individuals with low credit scores can also get these credit cards

The fixed deposit that you pledge as collateral is forfeited if you fail to clear off your unpaid outstanding bills

Such cards can improve your credit score

In certain cases, these cards offer far better rewards than other categories of cards

Contactless Secured Credit Card

With technological advancements, you can now get a contactless secured card. These credit cards have an inbuilt chip that uses radio waves to complete your transaction. You are required to tap or wave your contactless card near the card reader. 


Your card information is transmitted through radio waves to the POS machine using Radio Frequency Identification (RFID) technology. For instance, the Bajaj Finance RBL Bank Platinum Plus SuperCard uses RFID technology to complete your transactions. Here’s a look at the benefits of this contactless card:

  • Easy completion of a transaction using the RFID chip

  • Option to also use the Europay, Mastercard, Visa (EMV) chip

  • Up to 50 days of interest-free ATM withdrawals

  • Up to 90 days of interest-free emergency loans


Discounts, waivers and free complimentary access to airport lounges

Things to Remember When Applying for a Secured Credit Card

While secured credit cards are ideal to begin your credit journey, you need to consider the following points before getting them:

  • High interest rates may be levied on these cards due to the risk factors associated 

  • Low credit limits when compared to the unsecured type

  • You can get a credit limit less or equal to your FD value

  • Defaults on credit card bill payments may result in the liquidation of fixed deposits


So, take into account the factors mentioned above before planning to apply for a secured credit card.

Frequently Asked Questions

What is a secured credit card?

A secured credit card is slightly different from a regular card. The card issuer offers this card to you against a secured deposit. It is typically offered to people with do not have a credit history but need to build credit.

What categories of Secured credit cards are available?

You can only get a secured credit card by pledging collateral via a fixed deposit. However, different banks provide various categories of cards with different credit limits and features.

I have lost my secured credit card. What do I do now?

You must immediately contact your bank’s credit card services, usually, a toll-free number, to report the loss of your card.

What is the minimum deposit for a secured credit card?

The minimum deposit would differ from bank to bank. You can get in touch with your bank’s credit card customer care support to enquire about the minimum deposit required for getting one.

Can secured credit cards build your credit score?

Yes. If you make timely credit card payments, you can improve your credit score eventually.

How do you qualify for a secured credit card?

Secured credit card is issued against a collateral. The deposits are generally cash deposits, FDs, or other assets. The type of acceptable collateral could differ from one bank to another. If you can provide the necessary collateral accepted by the bank, you can qualify for this card.

Can I convert a Secured Credit Card to a regular credit card?

If  your credit card issuer sees that you have been regular with your credit card payments and have achieved a respectable credit score, and meet all the credit card eligibility criteria, you can request your credit card issuer to convert your Secured Credit Card to a regular credit card.

How long should I use a secured credit card?

The decision regarding how long you can use the card rests with you. In case your card expires, you can request the bank to provide you with a secured credit card with renewed validity.

Is interest charged on secured cards?

Yes. Secured credit cards work in the same way as regular credit cards. Therefore, failing to clear off all the outstanding dues before the due date may lead to interest being levied on the unpaid outstanding amount. The rate of interest applicable for the card, however, is dependent on the type of card you get.

What is a secured credit card limit?

This limit is decided on the basis of the collateral provided against it. Hence, it is important that you make your credit card bill payments on time, as any default on payment can lead to the amount being deducted from the collateral.

Where is a secured credit card accepted?

A secured credit card is accepted at all online and offline stores, fuel stations, supermarkets, restaurants, hotels, and so on. You can use it as a regular credit card at every Point of Sales (POS) system.

How can I get a higher credit limit with a secured credit card?

The credit limit depends on your total FD value or the value of the security pledged. The higher the value of the collateral, the higher the limit you are likely to get.

How can a secured credit card improve your credit score?

If you are someone whose credit scores are currently very low, making you ineligible for a variety of credit facilities, getting a secured credit card may help. As you continue to use your card, you develop a credit history in the process. Each time you pay your outstanding dues in full on time, your credit score gets a positive boost.

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