What Are Secured Credit Cards?
Secured credit cards are issued against the collateral of a fixed deposit (FD) opened with the issuing bank. These cards provide a credit limit based on the FD amount.
How Secured Credit Cards Help Build Credit
- Use the card for transactions.
- Pay bills on time.
- Gradually build your credit score.
Once you have a good credit score, you can apply for a regular credit card.
When Should You Consider a Secured Credit Card?
1. No Credit History
- If you don’t have a credit score or credit history, a secured card can be your first step toward building one.
2. Ineligibility for Regular Credit Cards
- If your income is below the minimum eligibility for a credit card, the bank may offer you a secured card against an FD.
3. Pathway to Regular Cards
- Use a secured card to build your credit score. Once it improves, you can apply for a regular credit card.
Key Takeaway
Secured credit cards are an excellent solution for those with poor or no credit history to:
- Build credit.
- Access the benefits of a credit card.
- Step closer to financial independence.