We all know that poor financial management can affect your credit score, making it hard to get a credit card. Understanding the benefits of a secured credit card enables you to enjoy all credit card features with poor or no credit history.
Other secured credit card advantages include a simple application process, credit score improvement and convenience. Keep reading this blog to delve deep into the details.
A secured credit card is provided against collateral, unlike normal credit cards. Banks issue these cards against a fixed deposit linked to your account to reduce risks.
However, the bank can liquidate the fixed deposit amount if you have credit card debt. So, it's essential to pay your secured credit card bills timely.
When you obtain a secured credit card, you have to continue maintaining the fixed deposit with the bank. Here, the credit limit will be 85% of the fixed deposit amount. So, the card automatically helps you manage your finances.
Sometimes, you may not have sufficient cash for payments. Bad credit scores can worsen the situation, as you can’t use a credit card. That’s when a secured credit card can save the day!
Curious to know all the benefits of a secured credit card? Read on.
Getting approval for a secured credit card is easy because there are no issues with credit scores. The bank or issuer has the collateral, so there are no problems approving your request.
The application process is also simple. As per the bank, you have to make an initial deposit which can start from ₹2000. The amount can be higher, but it's not exorbitant.
Using a secured credit card can conveniently build your credit score. It might take 6 to 12 months for a substantial credit history.
You just need to utilise the credit amount cautiously and pay the bills on time. These steps will help you establish yourself as a responsible card owner and increase your credit score.
You can use a secured credit card for everyday purchases like a standard credit card. Most offline stores accept these cards. Plus, they are also available for online transactions.
Some cards come with special EMI benefits, gift vouchers and purchase features. You can contact the bank to avail of these advantages.
If you prefer cashless transactions, secured credit cards are a safe option. It will help you while travelling or depositing a large amount for purchases.
Moreover, the bank will take care of your funds if you lose your credit card. This way, you can also avoid unauthorised access and credit fraud.
The bank might increase your credit limit as you continue improving your credit score, boosting your credit utilisation ratio.
You might also receive other benefits like low-interest loans with enhanced credit performance.
One of the prime benefits of a secured credit card is improving your financing abilities. You can enjoy a debt-free life with timely card payments and a better credit score.
Get rewarded every time you use with the Fi-Federal Co-Branded Credit Card! Your rewards will keep improving as your spending habits change each month. With up to 5X accelerated rewards on spending at any of India's top 21 brands, our card offers an exceptional deal. You can also access premium perks such as Lounge Access, Low Forex Fee, Instant Credit Card Issuance, Customised Reminders, and Spend Insights. As a welcome offer, you'll receive exclusive vouchers from top brands worth over ₹5,000!
To close a secured credit card, follow these steps:
Yes, secured credit cards build credit if you pay the related bills punctually. After 30-45 days of opening the credit card, your credit score will start building. This timeframe is needed for your account to be reported to the credit bureaus.
If your credit is less than ideal, opting for a secured credit card might be a wiser choice as they are generally more accessible for individuals with poor credit or no credit history. On the other hand, if your credit score is already good or excellent (around 670 and above), an unsecured credit card can offer superior advantages, such as rewards in popular spending categories like dining, groceries, and shopping, along with additional entertainment benefits.
When you get a secured credit card, the key distinction between that and an unsecured credit card lies in the upfront cash deposit you make to secure your credit limit. While eligibility for a secured card may involve considering your credit history, it ultimately requires a security deposit to establish the credit line.
