Secured Credit Card

Credit cards provide you with the means to manage your finances with ease; however, to get one, you must meet certain eligibility criteria set by the issuer. Your CIBIL score is one of the primary factors that a credit card issuer will assess and achieving a score above 750 is not easy. This is where a secured credit card may be beneficial if you have a less-than-ideal CIBIL score. This card requires you to pledge a fixed deposit as collateral, which makes it less risky for the bank or NBFC to issue a credit card.

Here are some of the best options available if you are looking to apply online for a secured credit card in India, along with their annual fees and fixed deposit requirements:

A secured credit card works just like a regular credit card, with the difference that you must provide a refundable cash deposit upfront. Credit card issuers are typically reluctant to offer a card to customers with low or no credit history. A secured card allows such customers to hold a credit card backed by security, such as a fixed deposit.

The amount you deposit against your card serves as your credit limit, which cannot be exceeded unless a top-up is made on the deposit. Regularly using a secured card and making timely payments helps build a healthy credit history. Once you have met the issuer’s eligibility requirements, you may apply for a regular credit card and get your deposit back.

This card is ideal for individuals without a credit history or with a low credit score who are looking to improve their credit rating. You can apply online for a secured credit card, which offers a straightforward approval process, as it’s based on a collateral deposit rather than income or credit score. This makes secured credit cards more accessible to those with limited income or a low credit score.

Students, freelancers, or individuals without a steady income can benefit from a secured card, as it provides a manageable way to build credit. Additionally, those aiming to transition to an unsecured credit card in the future can demonstrate responsible credit behaviour with a secured credit card.

You may get confused between a secured and a prepaid credit card. While a secured card operates against collateral, a prepaid credit card functions similarly to a gift card.

A secured credit card and a prepaid credit card may seem similar, but they have their differences. A secured card functions based on the deposit you pledge as collateral, while a prepaid credit card is similar to a gift card.

Here are some of the primary distinctive points between a secured credit card and a prepaid credit card:

Just like a regular credit card, a secured credit card has its share of advantages and disadvantages. Here is a quick overview of the pros and cons of a secured card:

There have been several technological advancements, and one primary outcome of this is contactless credit cards. A contactless secured card combines the convenience of contactless payment technology with the accessibility of a secured card.

These credit cards have an inbuilt chip and a radio antenna, which use Radio Frequency Identification (RFID) technology. The antenna on the card picks up a signal when it’s close to a card reader and allows transmission of information to the point-of-sale terminal.

The benefits of a contactless credit card include convenience, speed, and enhanced security, making it a popular choice for modern transactions. Here are some key advantages:

• Contactless credit cards enable fast transactions with a simple tap, saving time at checkout

• They offer enhanced security by using unique encrypted codes for each transaction

• Contactless cards are widely accepted across various merchants, making them easy to use in many locations

• For small purchases, no PIN or signature is needed, streamlining the payment process

• They are durable and experience less wear, as there’s no need for frequent swiping or inserting

While secured credit cards are a great way to build a healthy credit history, keep these key factors in mind before you apply online for a secured credit card:

• A secured card requires a deposit, which serves as collateral for the issuer, and your credit limit is equal to the deposit amount

• Ensure the issuer reports to credit bureaus so that your regular, responsible credit usage can build or improve your CIBIL score

• Be aware of potential fees, such as annual fees, application fees, or maintenance charges, as they may increase the cost of using the card

• Your credit card’s limit is often equal to the collateral amount that you deposit, so consider how much you can comfortably set aside as collateral

• Ensure that the credit card has a grace period for new purchases, as this allows you to pay off the balance before interest is applied

• Review all lending terms and conditions, including how payments, interest rates, and fees work, to avoid any hidden charges later