6 Myths About Secured Credit Cards You Should Stop Believing

Consumers use credit cards against FD to build or rebuild their credit history. Yet the existence of several myths about these cards creates confusion for cardholders trying to understand their use. This blog will help you to understand six common myths about credit cards against FDs. It explains how secured credit cards work, the real benefits they offer, and the right ways to use them. By debunking these myths, cardholders can understand how to manage credit responsibly, make informed financial decisions, and build a strong credit history.

Common Myths and Realities About Credit Cards Against FD

Let’s discuss some common myths about credit cards against fixed deposits (FDs) and debunk them with facts.

Myth 1: Secured cards offer limited benefits
Reality: Many secured cards, such as TATA Neu, HDFC Infinity, and IDFC First WOW! Black, offers value beyond basic credit building. Along with helping you establish a strong credit history, these cards offer rewards, cashback, travel perks, and lifestyle benefits. Cardholders can avail discounts on dining, shopping, and entertainment, as well as access to exclusive experiences and offers.

Myth 2: You can only get a low credit limit
Reality: The credit limit on a secured card depends on the amount you put in your fixed deposit. A bigger deposit usually gives you a higher credit limit. You will get 80–90% of your deposit as your credit limit, and you need to pay the full balance every month. This way, you can use more credit safely while keeping it secured.

Myth 3: The security deposit is a lost fee
Reality: The FD amount serves as collateral for the secured credit card, not as a fee. If a payment is missed or cannot be made, the bank can use the FD as security to cover the outstanding balance. The FD also earns interest while it is held, and typically 80–90% of the FD amount is used to determine the credit limit, allowing the cardholder to access credit safely.

Myth 4: Late payment to your due amount does not matter on a secured card
Reality: Paying the due amount in full can significantly improve your credit score and will positively impact your credit history as secured credit cards report to all major credit bureaus. Late or missed payments can harm the credit score, even on secured cards.

Myth 5: Secured cards don’t help to qualify for other credit
Reality: With regular usage and timely payments, secured cards help you build your credit history. By making timely payments on your secured card, every transaction and payment is recorded and reported to the credit bureaus. This consistent reporting helps you build a strong credit history over time.

Myth 6: You can’t get a credit card if you have no credit history
Reality: Credit cards against FD come with relaxed eligibility and are designed for consumers who are new-to-credit or someone who wants to rebuild their credit profile. By depositing the FD amount, consumers can gain access to credit and can build their history over time