Secured Credit Card Vs Unsecured Credit Card..

Chatur Credit Cards Information Podcast

If you have a stable monthly income, an ideal debt-to-income ratio, decent credit history and the associated credit score, then you have a fair chance of getting a credit card without any hassle. In fact, the card issuers will be behind you to provide you with a credit card.

What if you’re in a contrasting scenario – you don’t have stable income, no/poor credit history or credit score or high on debit, etc. No issuer would come forward to offer you any credit card or a loan.

In both the cases, if we say that you can get a credit card, would you believe it? Of course, you should, and we will tell you how.

If you’re in the first scenario, with a clean financial record, you would be offered an unsecured credit card. Unfortunately, if you’re in the second situation, you will still be offered a credit card, a secured one though that comes with some strings attached.

Let’s dig a little further to know the difference between secured and unsecured credit cards, how they work, and other things to consider while applying for one.

Click on the link to know about secured credit card vs unsecured credit cards: https://cardinsider.quora.com/Secured-Credit-Card-Vs-Unsecured-Credit-Card

What is Secured Credit Card?

As mentioned earlier, a secured credit card is designed to cater the group of people who frequently faces a rejection whenever they apply for a credit card. The reason could be lack of income or income proof, poor or no credit history/score, or any other.

A secured credit card, as the name implies, is a credit card issued on some collateral. Just like a secured loan, you need to produce some security to the card issuer to issue the card.

Banks and credit card issuers typically offer secured credit cards against a fixed deposit with them.

How Does Secured Credit Cards Work?

Secured credit cards work similar to any other credit cards. However, there are a few limitations in terms of credit card limit and other things.

The credit limit on secured credit cards is typically 75% to 85% of the FD amount. This means if you have a fixed deposit of Rs.1 lakh, you might receive a credit card with the total credit limit of Rs.75,000 to Rs.85,000. Thus, the higher your FD amount is, the higher would be the credit limit on your secured credit card.

Advantages and Disadvantages of Secured Credit Cards

• Easy and quick approval: You walk-in to the branch to open a fixed deposit and you walk out with a credit card. No income proofs, no back ground checks, nothing. The same identity and residential proofs you have submitted to open the FD would be used for your credit card account as well.
• Re-establish your credit: Don’t worry if you had a bad credit score or no score at all. With a secured credit card, you can build or re-build your credit. Make sure to use the card within the limit and clear the dues on time. Maintain consistency in card usage as well as making bill payments to build your credit score quickly. Once you have a decent score, you may be able to apply for a secured credit card.
• Earn interest on your FD: While serving as a security deposit, the FD also accrues interest if it is placed in an interest-bearing account. Depending on the deposit duration, you can earn decent interest on your FD.
• Low or no annual fee: Many banks in India issue secured credit cards that come with a low or no annual fee. Even the minimum fixed deposit required is as less as Rs.10,000 making the cards a feasible option.