Secured Credit Card – Meaning, Benefits, & How to Apply

It is a type of credit card issued against a fixed deposit (FD) that you hold with the bank. The FD serves as collateral, and your credit limit is usually a percentage of the deposit amount. This setup makes secured cards safer for lenders and accessible for users with limited or low credit history.

Unlike regular (unsecured) credit cards, which are issued based on your income and credit score, these credit cards rely on your FD as security. This makes them an excellent way to start or rebuild your credit profile while still enjoying all the benefits of a standard credit card.

A secured credit card is linked directly to your fixed deposit (FD), which acts as a security deposit for the card issuer. The process begins when you open an FD with the bank. Once the deposit is created, a secured card is issued against it.

Your credit limit is then set based on the FD amount, usually between 75% and 90% of its value. For instance, if you hold a fixed deposit of ₹1 Lakh, your credit card limit could range from ₹75,000 to ₹90,000.

You can use the card just like a regular debit or credit card for online and offline purchases. At the end of each billing cycle, you must repay the amount used. Timely repayments are reported to credit bureaus and help you build or improve your credit score over time. This makes secured cards a practical way to establish or rebuild your credit history responsibly.

Secured credit cards offer several advantages that make them ideal for individuals looking to build or rebuild their credit history. Here are some of the key benefits of secured credit card you should know:

• Easy Approval: Since these cards are backed by a fixed deposit, approval is simpler— even for those with low or no credit scores.

• Low Risk for Users: Your FD acts as a security deposit, reducing the risk of default for both you and the card issuer.

• Build or Improve Your Credit Score: Regular, on-time payments are reported to credit bureaus, helping you establish or strengthen your credit profile.

• Earn Interest on Fixed Deposit: Unlike prepaid cards, your FD continues to earn interest while you enjoy the benefits of a credit card.

• Global Acceptance: These credit cards work just like regular credit cards, allowing you to make purchases online and offline worldwide.

• Flexible Credit Limit: The credit limit is usually set at 75-90% of your fixed deposit amount, giving you spending flexibility.

A secured credit card is best suited for individuals who are new to credit or have a low CIBIL score. If you’ve never had a credit card or loan before, getting a secured card backed by a fixed deposit can help you start building your credit profile responsibly.

It’s also ideal for students, homemakers, and first-time earners who may not qualify for a regular credit card due to limited income proof or short credit histories. Additionally, individuals looking to rebuild their credit after past defaults can use a secured card to improve their credit score through timely repayments.

In short, these credit cards are the right choice if you want easy approval, low risk, and a practical way to establish or strengthen your creditworthiness.

You can easily apply for a secured credit card through both online and offline channels. The process is simple and quick, requiring only a fixed deposit and basic KYC verification.

Apply Online for a Secured Credit Card

1. Start by checking your eligibility – enter your profession, mobile number, and date of birth, agree to the terms, and select ‘Check Eligibility’.

2. You’ll receive a One-Time Password (OTP) on your mobile number; enter it to verify your identity.

3. Go through the pre-filled information, such as your PAN, PIN code, email ID, and income details, and confirm that everything is correct.

4. Pick a suitable card from the list of options shown to you.

5. Click on ‘Submit’ to complete and confirm your credit card application.

Apply Offline via Bank Branch

1. If you prefer taking the offline route, visit the nearest branch office of the credit card provider.

2. Submit an application for the credit card along with your fixed deposit details and KYC documents.

3. After verification, your card will be issued and activated.

Whether you apply online or offline, these credit cards give you an easy way to build or improve your credit score while enjoying flexible spending options.

Getting a secured credit card is easier than qualifying for a regular unsecured card. Since it’s backed by a fixed deposit, the approval process is simple and quick. To apply, you just need to meet the following basic eligibility criteria:

• Residency: You must be an Indian resident.

• Age: Minimum age of 18 years at the time of application.

• Fixed Deposit Amount: You should hold a fixed deposit of at least ₹10,000 to ₹25,000, depending on the card issuer’s policy.

• KYC Documents: Valid identity and address proof, such as PAN card, Aadhaar card, or passport.

Unlike unsecured cards that require a high credit score or strong income proof, these credit cards offer easy approval even for individuals with low or no CIBIL score, making them ideal for first-time credit users.

Increasing your credit limit on a secured credit card is simple and depends mainly on the value of your fixed deposit and your repayment history. Since your credit limit is linked to your FD, you can increase it by enhancing your fixed deposit amount. For example, if your current FD is ₹50,000 and you raise it to ₹1 lakh, your credit limit can also double accordingly.

Another way is to maintain timely repayments and consistent card usage for several months. This shows financial discipline and may qualify you for an upgrade to a higher-limit or even an unsecured credit card over time.

A secured credit card is one of the most effective tools for credit score improvement, especially for individuals with limited or no credit history. Since the card is backed by a fixed deposit, your payments are regularly reported to credit bureaus, helping you establish a positive credit record over time.

Making timely payments on your secured card shows lenders that you can manage credit responsibly. Similarly, maintaining a low credit utilisation ratio (ideally below 30% of your available limit) demonstrates financial discipline and further boosts your CIBIL score.

Frequent and consistent usage of your secured card, such as paying bills or making small purchases, helps keep your credit profile active. Over time, these responsible habits make you more likely to qualify for higher-limit or unsecured credit cards.

In short, a secured credit card for credit score improvement can be the first step towards long-term financial growth.