While credit cards help you easily manage financial transactions, you must meet certain eligibility parameters. 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.
This credit card type requires you to pledge a deposit as collateral. In case you have a poor credit score or a low credit history, you can easily avail a secured credit card. So, as a first-time card user, getting a secured credit card is easy.
However, remember that you can get this card only after you deposit a specific amount in the bank. Simply put, the amount you deposit becomes your credit card limit. By providing these secured credit cards, banks help you establish a good credit profile.
You may get confused between a secured and a prepaid credit card. While a secured credit card works against collateral, a prepaid credit card works similar to a gift card.
In a prepaid credit card, funds are already added, which are subsequently used when making transactions. Here are the main differences between prepaid and secured credit cards.
Secured Credit Card |
Prepaid Credit Card |
Secured credit card is issued against a collateral |
No collateral needed when issuing a prepaid credit card |
Funds are not pre-loaded in the card |
Funds are pre-loaded in the card |
Usually availed by people with a zero-credit history or very poor credit score |
Can be availed by any consumer |
Threat of incurring debt or losing collateral if payments not made on time |
Relatively safe since you can only transact up to the prepaid limit on the card |
Below listed are some of the best secured credit cards available in India:
The RBL Bank Supercard is one of the best credit cards against fixed deposits that provides you the power of four cards in one.
It can be used globally, and you stand to receive the best deals on entertainment, travel, online shopping, making purchases at stores, and so on. Besides receiving reward points on spends, you can enjoy 75% of your credit limit as the cash limit with this card.
Here are a few features of this secured credit card:
Easy conversion of purchases to affordable EMIs
Up to 5% cashback on a down payment at any Bajaj Finserv partner store
No interest charged on withdrawing cash for a period of up to 50 days
Avail a loan against your current card limit for a tenure of 3 months at a monthly interest of 1.16%
You can get this secured credit card if you have a deposit of more than ₹25,000 with SBI. Accepted globally in more than 24 million outlets, you can use the Unnati card to manage all your daily spends.
With the benefits of the contactless transaction, all you have to do is simply use the card at a secure card reader to complete any transaction. What’s more, you can add-on cards for your immediate family members too.
Here are a few features of this secured credit card from SBI:
Easy cash withdrawals from ATMs accepting Visa or Mastercard types
Use the card to pay your monthly utility bills with the help of the Easy Bill facility
Convert your high-value transactions to affordable EMIs
Get a cheque or DD against the available cash limit using the Easy Money option
This secured credit card comes with the unbeatable feature of guaranteed approval. In addition, you are not required to submit any proof of income. The only eligibility condition is having a fixed deposit with Axis Bank.
A few features of the card are listed as follows:
Interest-free period of up to 50 days
Flexible credit limit
High cash withdrawal limits
Access to various dining offers
Fuel surcharge waivers
Loyalty rewards
Option to receive up to four add-on credit cards with the primary card
The credit card can be used for both in-store and online purchases.
There are high chances of your secured credit card application getting approved. This is because the bank/financial institution is at minimum risk, as this is usually a credit card against an FD or any collateral you provide.
You can use your secured credit card to increase your credit score. This, in turn, could increase the chances of getting an unsecured credit card approved in the future.
Alternatively, if you are punctual with your payment history and achieve a respectable credit score, you can ask your credit card issuer to convert your secured credit card to a regular one.
Some banks give interest on the collateral offered against a secured credit card. This way, you can earn interest on your deposit while enjoying all the perks of using a secured credit card.
Many banks or credit card issuing companies offer grace periods on the secured credit card payment. Thus, if you cannot make your credit card payment on time, you can take advantage of this facility to arrange the funds.
A secured credit card can provide you with the following offers:
Reward points and cashback on purchases
Access to complimentary lounge facilities at airports
Entertainment, dining and movie offers
Discounts and free vouchers on offline and online purchases
Waivers such as those on fuel surcharge
Welcome benefits
Credit limit of up to 100% of your fixed deposit amount
Extensions on credit repayments
Facility to receive add-on cards for your family members
Conversion of purchases up to the specified limit into EMIs
Nominal joining and annual fees
Free credit facility up to a specified period
Just like a regular credit card, a secured card also has its own share of advantages and disadvantages. Here’s a quick preview of the pros and cons of such a credit card.
Pros of a Secured Credit Card
Secured credit cards can be availed even if you don’t have any income
Individuals with low credit scores can also avail these credit cards
Can improve your credit score
In some cases, these cards offer far better rewards than other categories of cards
Cons of a Secured Credit Card
The credit limit of secured credit cards is usually low
The fixed deposit that you pledge as collateral is forfeited if you fail to clear off your unpaid outstanding bills
Read the process of applying for a secured credit card both online and offline:
If you have an existing fixed deposit, you can easily apply for these credit cards by completing the following steps:
Step 1: Visit the official website of Bajaj Markets
Step 2: Provide your contact details along with your personal information
Step 3: Browse through the different secured cards provided by different banks
Step 4: Select the card
Step 5: Make an application
Step 6: Post-approval, you will receive your secured card
To make an offline application, you need to follow the steps given below:
Step 1: Visit the nearest branch of the bank and meet the credit card representatives
Step 2: If you do not have an existing fixed deposit, open a new fixed deposit for the required amount
Step 3: Fill in the application form and submit it along with the requisite documents
Step 4: Once your application is approved, you will receive your credit card shortly
This credit instrument is relatively straightforward, and here are a few key points to note.
Requires you to pledge collateral in the form of a deposit to get the card
Ideal choice if you are a first-time card user with no credit history
Your deposit acts as a security feature for the lender
The lender can liquidate your FD in case of any defaults in the credit card bill payments
Avoid missing your monthly payment and safeguard your deposit
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 create a credit history in the process. And each time you pay your outstanding dues in full on time, your credit score gets a positive boost.
However, remember that even with a secured credit card, it takes time to improve your credit score. Depending on how low your credit score is, it may take up to 6 months for you to see a noticeable positive effect. So, always use your credit card responsibly and pay your bills on time.
With technological advances, you can now get a contactless secured card. These credit cards have an in-built 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 Finserv 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 EMV chip
Up to 4,000 reward points
Up to 50 days of interest-free ATM withdrawals
Up to 90 days of interest-free emergency loans
Option to convert your purchase into EMIs
Discounts, waivers and free complimentary access to airport lounges
Anyone with a fixed deposit in their name may apply for a secured credit card in India. That said, the card can benefit individuals like the ones mentioned below.
Housewives
Individuals with low credit scores
Individuals with low monthly income
Retired individuals with no stable income
Individuals who do not possess valid income proof
Individuals who are ineligible for unsecured credit cards
While secured credit cards are ideal to begin your credit journey, you need to consider the following points before getting them:
High interest rates levied on these cards due to the risk factor 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.
You can only avail a secured credit card by pledging collateral such as a fixed deposit. However, different banks provide various categories of secured credit cards with different credit limits and features.
You must immediately contact the credit card services of the bank, usually, a toll-free number, to report the loss of your card.
It can help you build or improve your credit profile, thus rendering you eligible for an unsecured or regular credit card. This card provides a range of other benefits such as discounts and waivers, along with minimal documentation and a fast approval process.
A Secured credit card can be used as a regular credit card.However, it is important to note that the credit card limit for a Secured Credit Card would depend on the collateral offered against it.
The minimum deposit for a Secured Credit Card 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 availing a secured credit card.
Yes. If you make the payments on your Secured Credit Card on time, you can improve your credit score.
Secured credit card is issued against a collateral. The deposits are generally cash deposits, FDs, or other assets. The type of acceptable collateral for a Secured Credit Card could differ from one bank to another. If you can provide the necessary collateral accepted by the bank, you can qualify for a secured credit card.
You can improve your credit score with a secured credit card. Alternatively, 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.
Card issuers generally take anywhere from 30 to 45 days to report the issue of a secured credit card to credit information bureaus. Once the card is reported, every transaction and repayment that you make on time will start to build your credit. You can expect noticeable improvement in your credit score in a few months as long as you repay your bills within the due date.
The decision as to how long you can use a secured credit card rests with you. In fact, you can choose to use it for as long as you wish. In case your card expires, you can request the bank to provide you with a secured credit card with renewed validity.
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 a secured credit card, however, is dependent on the type of card you avail.
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.
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 unsecured credit card at every Point of Sales (POS) system.
The credit limit depends on your total FD value or the value of the security pledged. So, the value of the collateral, the higher the limit you are likely to get.
No, as these cards are issued against pledged collateral, you need not submit income proof.