What is a Secured Credit Card and How to Apply for One?
3 December 2022
If you do not have a good credit score or are new to credit cards, getting a secured credit card could be ideal.
A secured credit card requires cardholders to pay a specific sum as collateral and is especially issued to those with no credit history. The amount paid as collateral becomes the maximum credit limit. Banks or financial institutions issue such cards against investments like FDs or even savings account deposits.
10 Best Secured Credit Cards
Here’s a list of the best-secured credit cards in India:
SBI Elite Credit card
SBI SimplyClick Credit card
SBI SimplySave Credit card
ICICI Bank Instant Platinum Credit card
ICICI Bank Rubyx Credit card
Paisabazaar Step UP Credit card
SBI Unnati card
Axis Insta Easy Credit card
Kotak 811 #DreamDifferent Credit card
YES, prosperity Rewards Plus Credit card
Benefits of Secured Credit Cards
While some consider secured credit cards as expensive ways to get credit, people looking to build their credit score from scratch may find it beneficial. This increases their chances of receiving loans. Here’s a list of benefits of a secured credit card:
Acceptance: One can use secured credit cards instead of normal credit cards. They can be used to make purchases both online and offline.
Non-requirement of credit score: Secured credit cards do not require individuals to have a high credit score. Credit card issuers accept a security amount for these cards to make the issuance less risky. Individuals with no credit history can easily avail this payment card.
Flexible credit limit: To keep purchases and credit history secure, secured credit card issuers allow users to request a credit limit of their choice. Thus an Rs.50,000 credit limit requires users to pay a security deposit of the same amount. This flexibility of choosing one’s credit limit allows individuals to keep their spending within limits.
Possibility of improving credit score: Since credit history reports are constantly recorded, an individual may improve his/her credit score by using a secured credit card responsibly. If users make their payments within due dates and keep their purchases within 30% of their credit limit, their credit history improves significantly.
Switch to an unsecured card afterwards: When secured credit card users gather enough reliability and credit history, they can successfully switch to an unsecured credit card. The time required for the switch cannot be predicted beforehand, but it depends on how responsibly one uses the financial tool.
Secured credit cardsoffer the same reward points and other benefits that unsecured cards provide. It is easier to get a secured credit card if you have a low credit score and also improve your credit score by using a secured credit card. However, keep in mind that you have to pledge collateral to a secured credit card.
Q1. Can secured credit cards build one’s credit score?
Ans: Secured credit cards help build one’s credit score from scratch. The credit report records your payment details and the investment you’ve made in the form of collateral. In addition, on-time payments help improve the score.
Q2. What is the time limit for holding a secured credit card?
Ans: There are no limitations for holding and using secured credit cards. The duration depends on the time one requires to qualify for a normal credit card.
Q3. How can a user increase his/her secured credit card’s credit limit?
Ans: The credit limit for a secured credit card depends on the deposited amount kept as collateral with the bank that issues the card. Users can contact bank representatives to expand their credit limits.
Before you go…
Looking for instant ? personal loans 24*7 anywhere, anytime? Install the Navi app now!
Or, maybe you’re looking to buy that house you’ve been eyeing ? and you need a loan of up to Rs.10 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 6.95% p.a.
How about an affordable health insurance policy ?⚕️ starting at a monthly premium of just Rs. 241? Install the Navi app now and get your policy in under 2 minutes.
Instead, want to put your savings into action and kick-start your investment journey ? But don’t have time to do research. Invest now with Navi Nifty 50 Index Fund, sit back, and earn from the top 50 companies.
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
We are a diverse group of writers, editors and Subject Matter Experts striving to bring the most accurate, authentic and trustworthy finance and finance-related information to our readers. Our mission is to simplify jargon and industry lingo. We believe sharing knowledge through relatable content is a powerful medium to empower, guide and shape the mindset of a billion people of this country.
What is Personal Banking: Types, Benefits and Services
Personal banking typically includes checking accounts, savings accounts, money market accounts, and...Read More »
Increase Credit Card Limit – How To do It and Its Benefits
The credit card limit is the maximum amount of money you can spend using your credit card. In other...Read More »
What is a Credit Card Balance Transfer – List of Cards That Offer & How To Do it?
Are you paying a heavy interest rate on your credit card? There’s a solution to pay the amount du...Read More »
What is Price Skimming and How does it work?
Price skimming is a price determination strategy whereby firms initially charge a higher price for ...Read More »
What are Virtual Debit Cards – Benefits, Usage and How to Apply?
Virtual debit cards are digital forms of physical debit cards that store all vital payment informat...Read More »
Best Credit Card Offers in India in 2023
Credit card offers are incentives offered to credit cardholders when they use the cards to make pur...Read More »
Understanding Risk-Weighted Asset (RWA) and its Calculation in Banking
Risk-weighted asset or RWA is a banking term that refers to an asset classification system to deter...Read More »
List of 10 Best Savings Accounts in India
A savings account keeps your money safe, and lets you earn interest every quarter. There are many b...Read More »
What is Credit Appraisal – Eligibility, Benefits & How It is Done?
Ever wondered why loans get approved but also sometimes get rejected? Well, every bank has its own ...Read More »
Debt Trap: Meaning & How to Avoid Falling in It
Piling up debt could bring unnecessary stress. Having multiple loan EMIs and credit card bills to c...Read More »
How to Apply for Debt Consolidation Loans and What are Its Benefits?
If you have multiple loans, taking out a single loan to pay them off is known as a debt conso...Read More »
What is a Bank Identification Number (BIN) and How Does it Help in Preventing Fraud Transactions?
A Bank Identification Number or BIN refers to a credit card's initial four to six digits. The BIN i...Read More »
Diwali 2022: Diwali Holidays – The Festival of Lights
The ‘Festival of Lights’ is one of the biggest and most anticipated festivals in India. This is...Read More »
Best Index Funds – Top 20 Index Funds in India
Index funds replicate the performance of a stock market index, such as the Sensex or Nifty 50 to ge...Read More »