What is a Secured Credit Card?

A secured credit card can be your best friend if you are looking to build your Credit Score for the first time, or want to rebuild it. It is basically a type of credit card that requires a security deposit from the cardholder. This deposit is usually equal to the Credit Limit that you have. It acts as a security for the issuer i.e., in case you don’t pay your dues, the issuer can take the amount from your deposit.

In a nutshell, this card is meant for people with Bad Credit or no credit at all. But before choosing, you must understand what it means and how can it benefit you. We have also listed a few Bank options you can choose from to buy one.

How do Secured Card work in India?

The majority of credit cards available are unsecured. To buy this card you don’t need to give security or provide a guarantee to the creditors. You just require a Good Credit score and you’re good to go. This is not the same with secured cards.

To buy a secured card, you need to give Collateral like any of your assets or Income as an agreement with the company. The creditors first check your credit score and credit history. Based on which, the value of your security is evaluated. Ideally the amount you deposit is equal to the credit limit.

Once you pay the deposit, secured cards work exactly like a regular credit card. You can make transactions, pay your bills and rebuild your credit score for future loan applications.

When do you Need a Secured Credit Card?

If you are suffering from a bad credit score, then getting a regular credit card won’t be easy. Also, in order to get your future loans approved, you need to have a strong Credit Report. This is where you need a secured card. It works as a great tool to build a good credit history. And once, you have a 750+ score, you can move to an unsecured credit card. But no matter which card you use, you need to be responsible for paying your monthly dues on time.

Top Secured Credit Cards in India

Here are some of the popular banks that offer a secured card:

• HDFC secured credit card
• SBI secured credit card
• ICICI secured credit card
• Capital one secured credit card
• Citi secured credit card
• Opensky secured card
• Navy Federal Credit Union secured card
• Discover it secured credit card.
• First Progress secured credit card
• Green Dot primor secured card

Conclusion

In general, a secured credit card may not offer the best APRs (Annual Percentage Rate), but it can be very helpful for you to build a credit history. With a good history, you can qualify for the best loan terms and Credit card offers.