- HOW IT WORKS?
- Credit Score & Report
- Credit Bureaus
Secured Credit cards are like Standard Credit cards, issued against a fixed deposit account. These type of cards are issued without income proof and there is only a minimum documentation that is required to apply for a secured credit card. Some percentage of the principal amount in your account related to Fixed Deposit is the credit limit on such cards. Secured credit card holders have benefits that of regular credit cards and one of the important benefit is that it helps you to build your credit score.
What is Secured Credit Card?
On securing your fixed deposit account as collateral, a secured credit card is issued by a bank. The bank can deduct from your fixed deposit and the banks have authority to take possession of your fixed deposit account if you cannot pay your dues.
Features of Secured Credit Card
- No Impact of Credit Score – Banks do not consider credit score before issuing a secured credit card, unlike normal credit cards. When your credit score is low it would be difficult to seek Credit Card and secured Credit card is the best option in this context. Choosing secured credit card than a normal credit card will have a positive impact on your credit score at times when your credit score is not healthy.
- Builds your Credit History – You loan application may be rejected by the bank if you do not have a credit score or it so happens sometimes if you do not have a credit history for availing credit. To build your credit history secured credit cards comes in handy at this point of time. Furthermore, minimum documentation is needed.
- Helps to qualify future Loans – Secured credit card is very beneficial and useful for the people who actually started working and with a low income as secured credit card helps to build their credit history and after getting the good credit score they can get credit or loans easily.
- Helps in Smart Usage – Unlike the credit card, Secured credit is used wisely carefully and on a monthly basis and you should focus on using at 35 % of your credit card limit. If you are using maximum amounts of your credit, it reflects your credit hungry behaviour. Availing credit and timely payments is the one of the important aspect to build your credit score and secured credit card is one of the best products in building your credit score.
Benefits of Secured Credit Card
As most of the banks consider credit history of the applicant and decide regarding approval of credit. Secured Credit Card helps in building a credit history of an individual.
Let us discuss some of the benefits of Secured Credit Card.
- No Income Proof -There is no income proof required for getting secured credit card.
- No Limit for Deposit – For the users, banks provide flexibility, for the money related to deposit and there is nothing like minimum requirement related to deposit. It would be better if you try to put the higher deposit, as credit limit would be high and better you spend, the better your history related to your Credit.
- More Reward Points The more you use your secured credit card, the higher the reward points and is applicable the same with any credit card. Furthermore, the individual can earn interest on the deposit which is one of the ways to generate returns.
- Facility of Add-on-Card – Add-on card can be obtained for any of your family members through the procedure when you have got Secured Credit Card.
- No Address & ID proof required – Address and ID proof are not required in getting Secured Credit Card.
- Surcharge Waived Off – Surcharge related to Fuel may be waived off when you are using your secured Credit card at petrol filling stations in any places of the country and when you spend the minimum amount.
Top Banks Providing Secured Credit Card in India
The credit cards, issued against a fixed deposit are known as secured credit cards and using these cards is one of the best ways to improve your credit score. Usage of your Secured Credit card reflects the Credit Bureaus as how best you’re managing your credit.
The credit card usage for over a period of time provides enough data to the Credit bureaus and then helps in increasing the possibilities of getting credit cards that are unsecured in future.
Following are the banks that provide secured Credit cards in India (Fixed Deposit Based)
- Axis Bank that provides Axis Insta Easy Credit Cards
- HDFC Credit Cards
- ICICI Bank that provides ICICI Instant Platinum Credit Card
- SBI Bank
- IndusInd Bank
Pros and Cons of a Secured Credit Card
1. Pros of the Secured Credit Card:
- Fast Approval – You can get your Secured Credit card approved very fast, just by paying fixed deposit.
- Similar features of Debit and Credit Card – The secured credit card can be widely used just as Debit and Credit Card for purchasing any products and services globally.
- Reporting to Credit Bureaus – Secured Credit cards report to the bureaus related to credit and by using this secured credit card will contribute to your account history of the credit bureaus.
- Rebuilding your Credit Score – A Secured Credit card helps in building or rebuilding your credit score. Paying on time and by managing well your secured credit, your credit score will improve.
- Earn Interest on your Deposit Amount – You can earn interest on the deposit you made.
2. Cons of using Secured Credit Card:
- Compulsory Deposit – Unlike in other Credit Cards for getting this type of cards, you have to do a Security deposit.
- Additional charges – Sometimes, added to the security deposit there might be an additional fees that you have to apply per application and it sometimes also includes processing fees and annual fees.
Documentation Needed to Apply for a secured Credit Card
- A fixed deposit at any Bank’s Branch
- The Minimum and Maximum Fixed Deposit amount differs from bank to bank
- Minors are not eligible for this type of card
- Application process is very easy
- No additional address proof required, if the current address is same per bank’s record.
- No additional identity proof required.
Eligibility of Secured Credit Card
- Citizen of India
- PAN CARD,
- The Fixed Deposit amount varies from bank to bank
- ID Proofs (Aadhar Card, Voter ID, PAN Card, Driving License)
How Does a Secured Credit Card work?
Secured Credit Card works same as traditional Credit Card and you can get this card when you pay deposit first. Security deposit is an extra promise pay to the bank and will work as collateral. Most of the secured Credit Cards are designed and work like traditional cards.
An ideal secured credit card is similar to a regular credit card, except you have to make a deposit amount to the secured credit card issuer. Your credit line will be usually a percentage of your deposit ranging as per the bank’s percentage.
Why Have a Secured Credit Card
For anyone with poor credit score (or) no credit history secured credit cards are an excellent resource. In terms of purchasing abilities secured cards work the same as unsecured cards do. You secured credit card can be used anywhere MasterCard or visa is accepted if your secured card is MasterCard or Visa Branded.
The difference between unsecured credit card and the secured card is that upon approval, secured cards need a deposit.
How Do I Choose a Secured Credit Card?
The objective of taking a secured credit card is to create a credit history if you don’t have it and if you have a bad credit score and you want to improve it. Every bank is unique when they offer secured credit cards and every card has their own features. You have to research and choose the best one as per your needs and requirements. Compare the benefits of each secured credit card with other banks that provide secured credit card.
Tips to Use secured Credit Card
- The first and foremost thing to do is use it for small purchases and you can pay off well each month bill
- Always focus on paying more than the minimum.
- Set your Payment Alerts so that there would be no chance of missing any payment or Enroll in Auto-Pay
- Timely Payment helps to improve your credit score
Top Secured Credit Cards in India to Improve Credit Score
Following are some of the Secured Credit Card that helps to improve your Credit Score.
|Central Bank of India||Aspire Credit Card|
|Syndicate Bank||Classic/Gold Credit Card|
|ICICI Bank||ICICI Bank Coral Credit Card|
|Axis Bank||Insta Easy Credit Card|
|SBI||Advantage Credit Card|
|Kotak Mahindra Bank||Aqua Gold Card|
How to Close Secure Credit Card?
Closing Secured Credit Card procedure may differ from bank to bank, however following is the general procedure to close your secured credit card.
- First, call or send a written email to the customer care of that particular Secured Credit Card issuer or bank and communicate that you want to close your Secured Credit Card.
- After communicating pay off the entire Secured credit card bill and contact the bank.
- After receiving back your Fixed Deposit amount you can fill up a form that includes in writing regarding that you want to close your account.
- After your closure of Secure Credit Card is complete you can safely and securely destroy the Secured Credit Card.
Comparison of Secured Credit Cards in India 2017
|Credit Card Name||Features & Benefits||Balance Transfers||Annual Fee||Joining Fees||Interest Rate.|
|Axis Bank Insta Easy Credit Card.||Documentation is easy. Withdrawal is100%. Surcharge waiver related to Fuel on all Petrol Pumps is 2.5%. Accepted Globally||Yes||Nil||Rs 500/-||1.95 % Per Month|
|Syndicate Bank Classic/Gold Credit Card||Accepted Globally.
Reward Points starts with Rs 200 spend .In India Cash Withdrawal is Rs50,000
|No balance Transfers||Gold Secured Card Rs 500/-Classic Secured Card Rs 300/-||Nil||2% Per month|
|State Bank of India Gold Credit Card||Globally Accepted over 24 million outlets. You can withdraw cash from MasterCard/Visa ATMs in India across more than 100 cities. Flexipay facility related to EMI facility, Drop Box Locator, SMS Alerts and E-statement,||Yes||299/-||299/-||2.25 %|
|ICICI Bank Coral Credit Card||Your fixed deposit and credit card will be linked. 85% of the amount on your Fixed deposit is provided as credit limit. On every hundred rupees you spend on grocery and dining you will earn points related to 4 Payback. Furthermore, you will earn 2 points whenever you spend with your secured credit card. You can get 1 movie ticket as free when you buy the movie ticket. On Rs 5000 Fuel surcharge waiver of 2.5% every month.||Not Available||From 2nd year onwards Rs 500||500||1.99 % pm|
|ICICI Bank Insta Platinum Credit Card||This type of card is issued at its bank branch counter instantly. You have to open a fixed deposit. You will earn 3 payback points, for every hundred Rs you spend
For Minimum 180 days, the roll over interest related to credit is 2.49%. Waiver of 2.5 % Fuel surcharge on HPCL pumps. Per month Roll over Credit
interest is 2.49 %
|No||No||No Joining fees||2.49%|
Secured Credit Card FAQ’s
1. How much amount to be deposited to get secured credit card?
The amount to be deposited may vary from Bank to Bank.
2. Will I get the interest on your deposit?
Interest on your deposit depends from bank to bank whether they pay or not.
3. What kind of charges will be there on my Secured Credit Card?
Annual charges and application charges depends on from one bank to another.
4. The art of improving your credit score with Secured Card?
Secured Credit card is issued against the fixed deposit amount that is made by the applicant. For example, if an applicant deposits 1,00,000 he or she will get a credit limit of Rs 60000 to 70000. As this type of credit cards has a backup of fixed deposit these cards are known as secured credit cards. From six months to one year if the user of the secured credit card pays the outstanding bill before the due date there is a high possibility of building a sound and good credit history and a credit score.
5. When your Credit or CIBIL score is low what to do?
Secured Credit card is one of the best options that will help you to improve your credit score. Opting for a secured credit card is one of the best options when your Credit or CIBIL score is low. When fixed deposit is kept as collateral to the bank or the credit card issuer, timely payments will help to improve your credit score within 6 months to 1 year.
6. Who can apply for a Secured Credit Card?
You should be 21 years of age with or without salary. The secured card helps to build your credit score if you don’t have it and also helps to improve your credit score if you have it. By maintaining your respective account balances below your credit limits helps you to rebuild your credit score.