What is a Secured Credit Card? – Are you looking for a way to build your credit score and establish a good credit history? A secured credit card could be the answer. A secured credit card is a type of credit card that requires you to put down a security deposit, which is then held as collateral against the card. In this guide, we’ll explain how a secured credit card works and provide tips on how to use it to your advantage. With the right approach, you can use a secured credit card to build your credit score and establish a good credit history.
Table of Content
- Table of Content
- What is a Secured Credit Card? The meaning of a Secured Credit Card
- How Does Secured Credit Card Work?
- How to Apply for a Secured Credit Card in India
- Steps to Apply For The Credit Card
- The benefits of A Credit Card FD Based
- Best Secured Credit card in India
- How to Choose the best-secured credit card in India
- More Finance Definitions
- संक्षेप में (Conclusion)
What is a Secured Credit Card? The meaning of a Secured Credit Card
A secured credit card is a type of credit card that requires a security deposit in order to open an account. It is designed for people with limited or bad credit who are looking to build or rebuild their credit score.
When you apply for a secured credit card, you will be required to make a Fixed Deposit. This Fixed deposit is typically equal or 80 to 90% of the credit limit of the card and is held as collateral by the card issuer. The money you deposit is not used to pay for your purchases but rather serves as a guarantee that you will pay your balance in full each month.
Once you have been approved for a secured credit card, you will be able to use it just like a regular credit card. You can make purchases with the card, and you will be responsible for paying the balance in full each month. Your payment history will be reported to the major credit bureaus, which will help you build or rebuild your credit score.
In order to keep your FD Based credit card active, you must make your payments on time each month. If you make your payments, your credit issuer may close your account and keep your security deposit. It is important to remember that secured credit cards are not free money, and you will be responsible for the balance you accrue.
Overall, a secured credit card is a great way to build or rebuild your credit score. It is important to make sure that you are able to meet the minimum payments and pay off your balance in full each month. By doing this, you can start to improve your credit score and eventually qualify for regular, unsecured credit cards.
How Does Secured Credit Card Work?
Let’s say you want to improve your credit score in India, but you have a limited credit history or a poor credit score. They can apply for a secured credit card with a bank or financial institution that offers such a card.
The bank requires a deposit of, let’s say, Rs. 20,000 to open the secured credit card account. This amount serves as collateral for the credit limit on the card. The bank will then issue a credit card with a credit limit of Rs. 20,000.
The individual can use the credit card to make purchases up to the credit limit of Rs. 20,000. They are required to make minimum monthly payments on the outstanding balance, which includes interest charges and fees.
If the individual makes their payments on time and keeps their balance low, their credit score can improve over time. The bank will report the payment history to the credit bureaus, which will reflect positively on the individual’s credit report.
How to Apply for a Secured Credit Card in India
The first step to applying for a secured credit card in India is to research the different types of cards available. There are a variety of cards available, each with its own set of features and benefits.
It is important to compare the different cards to find one that best suits your needs. Consider factors such as the annual fee, interest rate, rewards program, and credit limit.
here are the few best-secured credit cards in India to apply for –
- SBI Card Unnati
- Axis Bank Insta Easy Credit Card
- ICICI Bank Coral Credit Card Against Fixed Deposit
- IDBI Bank Secured Credit Card
- Kotak Mahindra Bank Aqua Gold Credit Card
- HDFC Bank Freedom Secured Credit Card
- RBL Bank IGU NHS Golf World Credit Card
- Bank of Baroda Select Credit Card
- IndusInd Bank Secured Credit Card
- Punjab National Bank RuPay Select Credit Card
Steps to Apply For The Credit Card
Once you have chosen the card that best suits your needs, it is time to apply. You can apply for a secured credit card online or in person at a bank or financial institution.
When applying online, you will need to provide personal information such as your name, address, and date of birth. You will also need to provide financial information such as your income, assets, and liabilities.
Moreover, you have to start a fixed deposit for at least 1 year to get a credit limit of up to 100%. In most, banks it only offers 80 to 90% credit limit of your total fixed deposit amount.
When applying in person, you will need to provide the same information as you would online. You may also need to provide additional documents such as proof of address and identity. After submitting your application, the bank or financial institution will review your information and make a decision.
If your application is approved, you will receive your secured credit card at the registered address.
The benefits of A Credit Card FD Based
| Benefit | Description |
|---|---|
| Helps build credit | Secured credit cards report to credit bureaus and can help establish or improve credit history and score. |
| Lower credit risk | Since secured credit cards require a deposit, the credit risk for lenders is lower, which can result in lower interest rates and fees. |
| Access to credit | Those who may not qualify for a traditional credit card due to lack of credit history or poor credit can often still qualify for a secured credit card. |
| Can earn rewards | Some secured credit cards offer rewards programs, cashback or discounts on specific purchases, which can help save money on everyday expenses. |
| Security and fraud protection | Secured credit cards come with security features such as fraud alerts and zero liability protection, which can protect against unauthorized transactions. |
| Helps with budgeting | Secured credit cards can provide a line of credit for purchases, but with the deposit serving as a limit, which can help users stay within a budget. |
Best Secured Credit card in India
| Secured Credit Card | Issuing Bank |
|---|---|
| SBI Card Unnati | State Bank of India |
| Kotak 811 DreamDifferent | Kotak Bank |
| Axis Bank Insta Easy Credit Card | Axis Bank |
| ICICI Bank Coral Credit Card Against Fixed Deposit | ICICI Bank |
| IDBI Bank Secured Credit Card | IDBI Bank |
| Kotak Mahindra Bank Aqua Gold Credit Card | Kotak Mahindra Bank |
| HDFC Bank Regalia First Credit Card Against Fixed Deposit | HDFC Bank |
| RBL Bank IGU NHS Golf World Credit Card | RBL Bank |
| PaisaBazaar Step Up Credit Card | SBM Bank |
How to Choose the best-secured credit card in India
When it comes to choosing a credit card Against Fixed Deposit, it can be difficult to know which one is right for you. Secured credit cards are a great way to build or rebuild your credit, but you want to make sure you choose the right one for your needs. Here are some tips for choosing the right secured credit card:
| Factors | Overview |
|---|---|
| Consider Your Credit Score | Before you start looking for a secured credit card, it?s important to consider your credit score. This will help you determine which cards you qualify for and which ones you don?t. If your credit score is low, you may have to settle for a card with higher interest rates or fewer rewards. |
| Compare Fees | Secured credit cards come with various fees, such as annual fees, late payment fees, and balance transfer fees. It?s important to compare these fees to make sure you?re getting the best deal. Some cards may have lower fees, but higher interest rates, so be sure to compare the two. |
| Look for Rewards | Some secured credit cards offer rewards, such as cashback or points. These rewards can be a great way to save money and earn rewards on your purchases. Be sure to compare the rewards offered by different cards and choose the one that offers the best rewards for your spending habits. |
| Read the Terms and Conditions | Before you apply for a secured credit card, it?s important to read the all terms and conditions. |
More Finance Definitions
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|---|---|
| CRIF Credit Score | Are you looking for information about the CRIF High Mark Credit Score? |
| What is Experian Credit Score | An Experian Credit Score can help you do just that. |
| Cibil Score Meaning | Are you looking to understand and improve your credit score? |
| Credit Bureau in India | Are you wondering what a credit bureau is and best credit bureau in india is? |
| CEO Meaning | Are you curious about what a CEO does and what it takes to become one? |
| Leverage Meaning | With this guide, you can learn how to use leverage to get the most out of your investments. |
| Net Worth Meaning | Are you curious about what net worth is and how to calculate it? |
| T Series Owner | Are you curious to know who owns the popular T-Series music label? |
| Renting Vs Buying A Home or House in India | Are you trying to decide whether to rent or buy your next home? |
| Robert Kiyosaki Books Series ? Top 10 Books List To Read | We?ll take a look at the top 10 Robert Kiyosaki books that can help you achieve financial freedom |
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| What is Fixed Income? | Are you looking to achieve financial stability? |
| Diversification Meaning | Are you looking for help understanding the meaning and definition of diversification in financial planning? |
| Liquidity Meaning | Are you looking to understand the meaning and definition of liquidity? |
| What is Financial Analysis? | Are you looking to make smart financial decisions but don?t know where to start? |
| Fintech Meaning | Are you curious about what fintech is and how it can help you? |
| Digital Wallet Meaning | Our helpful guide on digital wallets! |
| Neo Bank Meaning | Are you looking to understand what Neo Banking is in India? |
संक्षेप में (Conclusion)
In conclusion, secured credit cards are a great way to build credit and establish a good credit history in India. They are a great option for those who may not qualify for a regular credit card or who want to start building their credit. Secured credit cards require a security deposit, which is held as collateral in case of default. They also come with a variety of rewards, benefits, and features, making them a great choice for those who want to build their credit. With the right secured credit card, you can start building your credit and establishing a positive credit history in India.
