Home » The A-Z of Secured Credit Card and How It Stacks Against Unsecured Credit Card

The A-Z of Secured Credit Card and How It Stacks Against Unsecured Credit Card

by Uneeb Khan
credit card

People who have poor credit scores may find it challenging to qualify for traditional credit cards. However, they still have the option to get secured credit cards. With this option, the cardholder provides collateral or a fixed deposit to secure the card, reducing the risk for the credit card company.

In India, the best-secured credit cards come with numerous benefits, including building credit scores, receiving rewards and cashback, and enjoying lower interest rates compared to unsecured ones. By using secured credit cards responsibly and making timely payments, individuals with bad credit can improve their credit scores and eventually qualify for unsecured credit cards with higher credit limits and more perks.

What is a secured credit card? 

There are two categories of credit cards – secured and unsecured. If you are applying for a secured credit card, you must make a security deposit upfront – and this fixed deposit will serve as collateral for your credit card. In the case of an unsecured one, you are not required to make any upfront deposit to insure your card. 

When opting for a secured credit card, a cash deposit is required upfront to ensure the issuer that any credit extended to you is protected. In case you are unable to clear your monthly balance or make the minimum payment, the issuer can use your deposit to cover the payment. As a result, secured credit cards are a useful tool for individuals looking to improve their credit scores if they have a poor credit rating.

By using a secured credit card responsibly, making timely payments, and keeping balances low, individuals can establish a positive credit history and increase their creditworthiness. With regular use and on-time payments, a secured credit card can help individuals build up their credit scores and eventually qualify for traditional credit cards with higher credit limits and better benefits.

Your fixed deposit is your credit limit

In the case of a secured credit card, the fixed deposit you pay upfront serves as your credit limit. This means that the available credit or line of credit extended to you will not exceed the upfront amount you paid as a fixed deposit. This is to protect you against overspending. The best-secured credit card in India will always seek to protect you against abusing your line of credit by limiting your available credit if you use a secured card.

In addition, always consider having a word with the representative. Credit card issuers may charge a card activation fee, annual membership fee, and credit limit or balance inquiry fees. These fees may eat into your deposit – so it’s best to speak with a representative before proceeding.

Build your credit score with a secured credit card

If you sign up for a secured credit card, the issuing company will most likely report your finances to credit bureaus. The credit reporting agency (CRAs) will review your credit card transactions and repayment history as well as financial accountability to raise your credit score if you have been performing well. 

The best fd credit card will enable you to boost your credit score in the case of secured cards. With improved credit scores come upgraded credit limits and larger loans as well as higher reward incentives. Your credit card company in collaboration with the credit bureaus will constantly review your credit performance to boost your score and increase your limits.

Benefits of secured credit cards

Some of the merits of secured credit cards offered by OneCard and others include: 

  • Potential for building a credit score
  • Opportunity to qualify for unsecured credit cards
  • Having your security deposit refunded to you after closing your account
  • Enjoying all benefits open to customers with unsecured cards

Whether or not to recommend a secured credit card depends on an individual’s unique financial situation. For individuals with poor credit scores, applying for a secured credit card may be a good way to improve their credit scores. Additionally, those who have sufficient fixed deposits to use as collateral may also consider a secured credit card.

However, obtaining a secured credit card requires a high level of financial prudence. Also, it does not exempt individuals from the consequences of late repayments, overspending, and other financially reckless behaviours. It is essential to only obtain a secured credit card if you are confident that you can demonstrate responsible financial behaviour and make timely payments. By using a secured credit card responsibly and building a positive credit history, individuals can improve their credit scores and eventually qualify for traditional credit cards with better terms and more benefits.


A secured credit card is a good option for those whose credit score does not align with market standards. By doing responsible management, the borrower can improve their credit profile which will make them eligible for further loans.

By evaluating all the points discussed in the blog, we can conclude that opting for the best secured credit card is a far better choice than the unsecured ones.

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