What Is a Secured Credit Card – How Does It Work

Looking for a credit card minus the worry of paying bills on time?

Here’s a secured credit card!

A secured credit card can be a terrific alternative if you’re looking to raise your credit ratings or establish a credit history. Secured credit cards operate similarly to regular credit cards. The only difference is that you make an upfront cash deposit with a secured card to secure your credit line.

While a secured card’s line of credit may be offered without a security deposit, eligibility for the card may be based on credit history.

With a secured credit card, paying your bills on time is just as important as a regular card. If you don’t make payments as agreed, the banks will use this security deposit to cover purchases. Remember that the card issuer may keep your warranty if you miss payments.

Who can benefit from a Secured Credit Card?


This could be an essential tool for individuals who want to rebuild their credit scores. If you have a bad CIBIL score, simply using cash, prepaid cards, or debit cards to make your transactions won’t help.

When used correctly, a secured credit card can help develop or rebuild your credit score to help you shift to a regular credit card, if needed.

How do Secured Credit Cards function?

Most reputable banks and credit card businesses issue secured cards. You can apply for a secured card just like a regular credit card. Once accepted, you can use your secured card for everyday purchases, including grocery shopping or travel arrangements.

It typically takes one to two months after you start using your secured card for your score to increase. It may take up to six months for a credit score to appear on your record if you are just starting to develop a score.

Benefits of a Secured Credit Card

1. You don’t need excellent credit to be eligible


When you apply for an unsecured credit card, your application might not be accepted if your credit score is low. For a secured credit card, you must pay a security deposit.

2. Your security deposit determines your credit limit

As the name might imply, a cash deposit in a collateral account backs secured credit cards. You can choose any credit limit you like when you apply for a secured credit card.

3. You can reap the benefits of an unsecured credit card

You can use your secured credit card just like an unsecured card. Once you’re set up with your secured credit card, you can enjoy the convenience of using a credit card for everyday purchases — all while making monthly payments toward your balance.

4. With sensible card use, your credit score could improve


Your secured credit card excels in this situation. Your secured credit card can genuinely assist you in establishing or improving a credit score, unlike a debit card or prepaid card.

5. You can upgrade to an unsecured card.

A secured credit card serves as a temporary fix between not having a good credit score and becoming eligible for an unsecured card. Your credit history is based on how you responsibly use your secured credit card and handle other issues affecting your credit report.

If you are approved for an unsecured card, you can cancel your secured card and get your security deposit back.


Consider obtaining a secured credit card if you want a credit card but need to be qualified to apply for a conventional one. Many secured credit cards are available in India, including cashback cards, retail cards, reward cards, and travel cards.

Look into and compare the different types of secured credits before choosing one to continue with. A secured credit card can be a wise choice if you’re a high-risk borrower. Make sure you have enough money to pay an upfront payment.

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