Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
  • What is a Secured Credit Card?

    A secured credit card is a card which is backed by a payment which is used as collateral. A secured credit card is usually offered to the people who do not have a credit history or have a limited credit history by still require a credit card.

    Banks provide these secured credit cards to their customers to help them build their credit profile. The credit card is issued only after a certain amount is paid to the bank and that amount usually acts as the credit limit of the card.

    Difference between a secured credit card and prepaid credit card

    The major difference between a secured credit card and a prepaid credit card is the credit history of the customer.

    A secured credit card is given to a customer who have a limited credit history or none and is usually given to build up their creditworthiness. The bank has a secured card to a customer in exchange for a certain amount of money to deposit as collateral. This deposit which is made becomes the credit limit of the provided card. The credit limit can be increased by adding sufficient funds to the account or if you have a good repayment history, the bank will add a certain amount to your monthly limit.

    On the other hand, a prepaid credit card has no collateral involved. As the name suggests, it is prepaid and comes with a credit limit provided by the bank depending on a number of factors. These factors are the credit report of the customer, the credit score, and payment records which showcase the ability or inability of the customer to repay the amount spent.

    If you do not have sufficient credit, a secured credit card is the safest option as they do not charge high rates of interest like an unsecured credit card and do not have a high annual or joining fee.

    However, for an unsecured credit card, it is advised to keep your expenses on the low and pay it back in full at the end of the month. The credit utilization ratio must be between 10%-20% at the most. Having a secured credit card means to spend wisely and not more than you can pay off.

    Applying for a Secured Credit Card

    Applying for a secured credit card is not any different than applying for an unsecured one. It is a fast and simple process as most major banks just check your credit score and do not conduct any other inquiries on your credit history or report.

    Even though it is a simple process, there are few things which must be kept in mind before applying for a secured credit card.

    Credit Limit:

    It is very important to make sure that you do not go overboard with your credit card limit. It is advised to start with a lower credit limit and then increase it only when you will be able to pay it off in full at the end of the month. If you deposit a large sum of money, it does not mean that you should spend it all. Banks will have a constant check on your spending habits, so if you have a good repayment history, banks can allocate a certain amount of money to your credit card without you making any kind of deposit.


    Every bank has its own eligibility criteria when it comes to a secured credit card. While some banks require a minimum deposit required for the card, other banks need you to open an fixed deposit in the bank and that amount in the fixed deposit serves as the collateral required by the bank in case you are not able to pay your dues.


    It is important to conduct thorough research on the types of secured credit cards and the ones which offer you the most benefits. Secured credit cards offer you a wide range of discounts and offers just like an unsecured card.

    Features and Benefits of Secured Credit Cards

    Secured credit cards have a number of benefits and features surrounding them and are mainly for the people who do not have enough credit history required for an unsecured or prepaid credit card.

    Some of the features of a secured credit card are:

    • The applicants are not required to provide additional inquiries of their credit history.
    • The process of approval is fast as the banks are risk-free since the individuals are offered the cards on the back of a deposit serving as collateral.
    • There are some banks which offer interest on the security deposit. This helps the applicants of secured credit cards to earn interest on their deposit along with the benefits.
    • Some secured credit cards come with a grace period. This helps individuals to get a few days more to make their payments, in case of any delay.

    Top Secured Credit Cards Available in the Market

    SBI Advantage Plus Card

    This SBI Advantage Plus Credit Card is among the best secured credit cards in the market. This card offers much more benefits than a regular credit card and can be used both nationally and internationally. The card offers a credit limit up to 85% of the amount deposited in the FD account.

    Features of SBI Advantage Plus Card
    • Extended credit allows the cardholders to pay the minimum amount and carry forward the remaining amount at the low interest of 2.25% per month.
    • The cash withdrawal limit is up to 100% of the credit limit.
    • Comes with ‘Easy Money’ facility. This enables cardholders to get a demand draft or cheque delivered to their registered address.
    • Cardholders can transfer credit from other credit cards at a nominal processing fee.
    • Individuals with this card become automatically eligible for an Encash facility of either Rs. 25,000 or Rs, 50,000. A Fixed Deposit is opened in their name with they are billed Rs. 2,500 or Rs. 5,000 as EMI for 11 months.
    Benefits of SBI Advantage Plus Card:
    • Can be used at more than 1 million Visa or MasterCard ATMs globally.
    • Transactions can be converted into EMIs using the Flexipay option.
    • Interest is provided on the fixed deposit after 555 days.
    • Benefits of supplementary credit cards.

    Axis Insta Easy Credit Card

    The Axis Insta Easy Credit Card gives you a good credit limit and also offers fuel surcharge waiver.

    Features of Axis Insta Easy Credit Card
    • Withdraw up to 100% of your credit limit
    • Get a credit limit up to 80% of your fixed deposit
    • Get 1% fuel surcharge waiver.
    Benefits of Axis Insta Easy Credit Card
    • Get 15% discount on dining.
    • The card comes with a platinum chip.
    • For transactions over Rs.2,500, you can convert them into EMIs.

    FAQs Related to Secured Credit Card

    1. What is a good secured credit card?

      A good secured credit card helps you build credit and contributes highly to your credit score as well. The credit card requires a certain amount of money to be paid as deposit and that deposit is usually considered as the credit limit of your card. Timely repayment of dues results in the building of good credit which can help you apply for a prepaid credit card.

    2. Will a secured card build credit?

      A secured credit card is offered by the bank for the sole reason of building credit for the people who do not have enough credit to apply for a prepaid credit card.

    3. Does closing a secured credit card hurt?

      Closing any credit card will hurt your credit score. It is always advised to keep a credit card open even if you are not using it. It can always be kept for emergencies. Closing or cancelling a card can reflect poorly on your spending habits. To know more it is advised you get in touch with the bank.

    4. How fast can you build credit with a secured credit card?

      Building credit with your secured credit card can only happen if you are spending wisely and not more than you can afford. By having a secured credit card, only the money you put in as deposit will be available to you as a credit limit. However, it is always better to start with smaller purchases which are easy to pay off. If you are increasing your expenditure gradually on a monthly basis, it will help you build your credit score faster.

    5. How long should I keep a secured credit card?

      You can keep a secured credit card as long as required. To know more it is advised you get in touch with the representative of the bank.

    6. Do I get my deposit back from a secured credit card?

      No, once you have given the money as a deposit to the bank, it is used as collateral for the bank in case you are not able to pay your dues. In most cases, the money as your credit limit comes from the deposit and is subtracted as an when you wish to increase your limit. Once you cancel or close your card, only then the bank will make the calculations and return the remainder of the money, if any.

    7. How can I increase my secured credit card limit?

      You can increase your credit limit on your secured credit card by requesting the bank by contacting the customer care of the bank or by visiting the bank branch. The credit limit will be increased depending on the amount you have deposited in the bank as collateral.

    8. What is a secured card?

      A secured credit card is a card which has been backed by a cash deposit. The deposit will serve as a collateral on your account, and will provide the credit card issuer with a security in case you are unable to make the payments. 

    9. How do secured cards work?

      A secured credit card always backed by a deposit that you would make when you open your account. This deposit will be the same as your credit limit. Hence, if you deposit Rs.15,000, you will have a Rs.15,000 limit. This deposit will reduce the risk for the card issuer. 

    10. Do secured cards really help your credit?

      Having a secured credit card can help you in establishing and re-establishing your credit. This is because the payments will be included in your credit report, and when you pay on time and also manage the balance, it will help you improve your credit score. 

    11. How fast do secured cards build credit?

      Once you have opened your secured credit card, it will take around 30-45 days for this account to be reported to the credit bureaus. This is is when your credit score will start building. 

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