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If you have built a good credit history with a stable income, you have a good chance of getting a credit card. However, secured credit cards are a great option for you even if you are new to the credit world. 

 

Credit cards are broadly classified into two types: secured and unsecured. Secured cards require collateral and are designed to give credit access to those without prior exposure to credit. Unsecured cards do not have any security requirements and are available to those who have good creditworthiness. On Bajaj Markets, you can compare a wide range of secured and unsecured credit cards and enjoy exclusive perks.

Secured Credit Cards vs Unsecured Credit Cards

Before shortlisting variants, decide on the type of card that is most suitable for you. Refer to this table to understand the key differences between these cards: 

Parameters

Unsecured Credit Cards

Secured Credit Cards

Collateral

You do not need to provide any asset as collateral

You need to provide assets like gold or FDs as collateral

Purpose

These provide exclusive rewards and offers depending on the card type

You can use this credit card to establish or improve credit history 

Interest Rates

Interest rates are comparatively higher than other forms of credit 

Interest rates are lower than unsecured cards

Credit Score Requirement

You need a high score to apply

You can apply even if you have no or a low score

Credit Limit

The available limit depends on your overall profile

The credit limit depends on the collateral and your profile

Fees and Charges

These cards come with annual renewal fees and other charges or may be lifetime-free cards

These cards come with comparatively lower charges or have zero joining/annual fees

Reward Structure

They provide exclusive benefits and attractive rewards

Although these cards provide rewards, they are not as generous in their perks as unsecured cards

Understanding the Difference in Detail

Here is a detailed comparison of secured and unsecured credit cards so you can make an informed decision.

  • Verification and Checks

When you apply for a secured card, the processing is simpler as the issuer does not conduct many checks. For an unsecured card, the issuer checks various aspects like your income, nature of the occupation, employer profile, credit score, and more.

  • Issuance Period

A secured credit card is generally issued quickly, especially if you already have a deposit with the issuer. Unsecured cards take longer to approve as they involve several layers of verification. 

  • Interest Rates

Secured cards typically carry lower rates of interest because of the available collateral. Unsecured cards have a higher interest rate because of the increased risk.

  • Credit Limit

For a secured card, the credit limit is assigned as a percentage of the amount of the fixed deposit. It is usually around 80% of the deposited amount, but can be 100% too.

 

The credit limit of an unsecured credit card depends on your credit profile. A stronger profile and higher score can increase your chances of securing a higher limit.

  • Credit Card Offers

Both types of credit cards come with various offers, but unsecured credit cards tend to have better offers. 

  • Consequence of Delay in Bill Payment

If you fail to pay the bill of an unsecured card, the issuer will levy a compounding interest on the outstanding balance. In secured cards, the issuer can liquidate your collateral to recover the dues along with an interest charge.

Frequently Asked Questions

Should I get a secured credit card or an unsecured credit card?

This decision depends entirely on your finances, creditworthiness and requirements. If you have a good credit score, you are highly likely to get an unsecured card. If you do not have a credit history or if your credit score is below 700, a secured card may be better.

What are the drawbacks of getting a secured credit card?

In case you do not pay your credit card bill on time, you risk losing your deposit entirely or partially.

Do secured cards build credit?

Yes, secured credit cards do help you build your credit history and improve your creditworthiness when you pay the dues on time.

Can I get an unsecured credit card if I already have a secured one?

Yes, there is no restriction on getting a second credit card if you meet the eligibility requirements. Some issuers also offer you the facility of converting your secured card into an unsecured one.

Which financial institution offers secured credit cards?

You can apply for the Rupicard Secured Credit Card through Bajaj Markets if you meet the eligibility requirements.

What is the most significant benefit of getting a secured credit card?

The primary advantage of a secured card is that you can apply for it even if you do not have a high credit score and use it responsibly to build a good credit history.

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