Do you earn a reliable income every month? Well, it's pretty easy to get a credit card, then.
In today's world, a credit card is a wonder-tool for managing finances. A secured credit card can be a good choice if your credit score is low or null with a minimum or no credit history. But if you have a good credit score and a constant source of income, you can get an unsecured credit card hassle-free. A good credit score in India is considered to be anything above 700.

What is an Unsecured Credit Card?

When you think of a credit card, it's likely that unsecured credit cards come to mind. An unsecured credit card doesn't come with any deposit or collateral. Unlike secured credit cards, unsecured cards are not linked to a cash security deposit. Instead, the card issuer determines your credit limit when you open the account.  They are more widely in circulation and popular than secured credit cards. And anybody with a strong credit score can get their hands on an unsecured credit card.

Unsecured credit cards can come in various types, including travel rewards cards, cash back cards, and balance transfer cards.

Let's take a closer look at how they work, how they differ from secured cards and how to get yourself a good unsecured credit card.

How do Unsecured Credit Cards Work?

• Let's say you have a credit line of ₹50,000; in January, you spend ₹10,000. In February, you're left with ₹40,000, so you pay off the due of ₹10,000. And make a bigger transaction of ₹15,000 the next month. So in simple words, the credit limit renews with time. If you maintain a healthy credit history by paying off dues on time and not over-utilising your credit, there's a high chance that your credit limit may increase too.

• A credit card without collateral comes with more risk to the lender compared to a secured card. Therefore, the better your credit score is, the more favourable your terms are likely to be. Unlike a secured credit card, where the credit line is backed by a deposit, an unsecured credit card relies solely on the borrower's creditworthiness and repayment ability.

What's the Difference Between Unsecured and Secured Credit Cards?

There are more similarities than differences between the both. One major difference is that a secured credit card comes with collateral. If someone with a poor credit score with minimal credit history wants to get a credit card, a secured credit card is what they can opt for. But anyone with a strong credit score and a healthy credit history can get an unsecured credit card.

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With secured credit card, your credit limit is determined based on the valuation of your collateral, while credit limits on an unsecured credit card depend on factors like your income and creditworthiness.

Your Search for the Best Credit Card Ends Here!

Fi & Federal Bank brings you a reward-heavy, hassle-free credit card. Get rewarded every time you purchase with our 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 ₹5,000! So hop on to the waitlist now!

Conclusion

Credit cards have become an essential and popular financial tool in recent days. It provides convenience, flexibility, rewards, and benefits. Many people believe it's better to make purchases with credit cards so the cash in hand doesn't get parked wholly. Credit cards offer partial payments or easy EMIs, making them a favourable choice for many. If you have a strong credit score and have already built a good credit history, you can go for an unsecured credit card. But secured credit cards can be your saviour if you don't have a credit score and a credit history.

Frequently Asked Questions

1. What is the best unsecured credit card?

There are many unsecured credit cards offered by the top banks in India. However, you can check out this credit card offered by Fi and Federal Bank. It comes with 5% valueback on all your spends and a welcome bonus of exclusive brand vouchers worth ₹5,000. Plus you get 5x rewards on spends with your top brands. And the list of reward and befits go on.

2. How do I get an unsecured credit card?

• Check your credit report and credit score
• Visit your bank's website or visit the nearest branch to check out the credit cards they offer and choose one as per your needs
• You can apply online or at the branch
• The bank will examine your credit history and the application
• If you meet all the eligibility criteria, you'll get a credit card issued

3. What is a secured and unsecured credit?

Secured credit refers to a loan or line of credit that is backed by collateral, such as a property, vehicle, FD, or savings account, which the lender can claim if the borrower defaults. Unsecured credit, on the other hand, does not require collateral and is based primarily on the borrower's creditworthiness, income, and other financial factors.

4. What is an unsecured credit limit?

An unsecured credit limit refers to the maximum amount of credit that a lender extends to a borrower without requiring any collateral. It is the borrowing limit granted based on the borrower's creditworthiness, income, and other financial factors. It represents the amount of credit the borrower can access without providing any form of security.