Secured Credit Card: Meaning, Benefits, and Eligibility Explained

Are you searching for a credit card option with no credit score requirement? A secured credit card can answer your need and you can use it just like a regular credit card. If you are wondering what is a secured credit card, it is a credit card issued by banks against your FDs.

If your credit score is not high enough to qualify for a regular card, you can request a secured credit card from a bank. Additionally, if you have no credit history, you can leverage your Fixed Deposits to obtain a credit card and start building your creditworthiness.

Aside from applying for a secured credit card, why don't you ensure a high-return FD investment? With Stable Money, you can now open an FD account and earn a higher interest of up to 8.80%. Just download the Stable Money application, choose a bank or NBFC with higher returns and invest. 

How Does a Secured Credit Card Work?

For example, if you invest ₹50,000 in a Fixed Deposit at a bank and request a secured credit card, the bank will typically offer a credit limit ranging from 90% to 100% of the FD amount, depending on its policy. By maintaining a solid repayment history, you can gradually increase this credit limit over time.

Secured Credit Card Benefits and Features

Now that you have a basic idea about what is a secured Credit Card, you should know about its features before applying for it:

• Your FD Still Grows: With a secured credit card, you get the benefits of a regular card while your FD continues to earn interest and grow. 
• Grace Period: Based on banks or other FD providers, you can enjoy an interest-free period of 20 to 50 days. You need to pay your full credit card amount by the due date.
• Get Credit Limit: Whether you have no credit history or a low credit score, you get a credit limit of 90% to even 100% of your FD amount.
• Cashback: Banks offer cashback or rewards on a secured credit card just like a regular credit card. Use them wisely for purchases on your credit card for benefits.
• Smart EMI: You can use a secured credit card to convert your purchases into EMIs, both online and offline.
• Provide no Income Statement: When applying for a secured credit card, you do not need to worry about earnings. You can apply for it without producing an income statement or credit history.
• Easy Card Management: Most banks offer their dedicated applications via which you can monitor and control your credit card transactions.
• Protects Your FD: Once you get a secured credit card, you get access to immediate funds during needs. Opting for a credit card protects your FD investment.

FDs offer more advantages than secured cards. With Stable Money, upon opening an FD, you need to pay zero penalty charges upon prematurely breaking an FD account. For bigger financial needs, you can get immediate access to funds after just 7 days of FD account creation. 

Secured Credit Card Eligibility Criteria

To know more about what is the secured credit card, take a look at the eligibilities you need to apply for:

• You must be an Indian citizen with a valid address in India to apply for an FD-backed credit card.
• You must be at least 18 years old to apply for a secured card. Depending on the bank, people up to 75 years old can apply for it.
• When applying for a secured credit card, you must have an FD with a bank for a certain amount, which can vary depending on the bank's policy. The bank will typically offer a credit limit based on the amount of your FD.

Documents Needed to Apply for a Credit Card Against FD

Most FD providers do not ask for verification documents to assign you a credit card against an FD online. 

However, you must have a few documents if you are visiting a physical banking branch for a card. You need to produce an address, ID proof and FD details to the branch.

With Stable Money, you can open a Fixed Deposit account through a video KYC. The only document you need to provide is the PAN card, and within a few minutes, your video KYC will be processed. Download our Stable Money app and create your FD account easily with a video KYC. 

A Few Important Points You Should Know About Secured Credit Cards

After understanding what is the secured Credit Card, take note of the following points:

Determine Your Credit Limit

While a secured credit card doesn't require a credit history, banks determine your credit limit based on your FD amount. 

For example, if a bank offers up to 90% of your FD amount as a credit limit, and you have an FD of ₹50,000, your credit limit could be as high as ₹45,000. You can increase this limit by paying the full or minimum amount by the due date.

Practice Credit Hygiene 

You can build your creditworthiness by using a credit card against your FDs. Whether you are starting from scratch or want to improve your credit score, this card can help.

Therefore, always clear your dues before the due dates in full. If you are unable to pay the full amount, you can also pay a minimum amount on the due date to improve your credit score. Never share your OTP or credit card details, like the expiry date, CVV, OTPs, etc., with anyone. 

Do not Break Your Fixed Deposits

Now, that you know, what is a secured credit card, it is important to understand what might affect it. When applying for a secured credit card against your FDs, avoid premature FD withdrawals, as this can impact your credit limit or even result in the closure of your credit card.

Banks of FD providers facilitate a credit card by keeping your FD as collateral. It is advisable to withdraw your FDs only after their maturity if you want to keep your credit card operational. 

Understanding secured credit meaning can help you to get a credit card without a credit score. You can meet your urgent financial requirements. But how about getting higher FD returns and availing additional interest rates? 

With Stable Money, you not only earn up to 8.80% interest on your FD, but women can also enjoy additional interest rates from our partnering FD providers, making it an even more rewarding investment option.