Download the
Paisabazaar app Today!
Paisabazaar app Today!
Get instant access to loans, credit cards, and financial tools — all in one place
Credit score is one of the most crucial financial parameters that banks/NBFCs take into consideration while offering you credit cards, personal loans, home loans and other financial products. In layman’s terms, credit score is the numerical representation of how well you manage your debts. A good credit score improves your eligibility for loans and credit cards.
Usually, a credit score of 750 or above is considered as good and those having lower credit scores usually have lower eligibility. Some lenders also charge higher interest rates to those having lower credit scores. Those having existing loans or credit cards can improve or build their credit score through timely repayment and other credit healthy behaviours. However, for those who do not have any existing loans, taking a fresh loan for just building a credit score may not be a wise idea as that would incur interest costs.
Availing of regular credit cards for improving credit scores could be difficult for many as banks desist from approving credit cards to ‘New-to-Credit’ consumers or those having a poor credit scores. Plus, there can be other factors like lack of adequate income, location constraints, ineligible occupation or employers’ profiles, etc act as constraints in availing regular credit cards. The best option for such individuals would be to avail a secured credit card.
What are secured credit cards
Secured credit cards are similar to unsecured credit cards with the only difference being that secured credit cards are backed by a fixed deposit (as collateral) opened with the bank. As these FD(s) are lien marked by the bank, one cannot close those FDs until he surrenders his secured credit card. The issuer bank can also close FD(s) in the event of default. These almost eliminate reduce the credit risk of the issuer bank, thereby leading them to offer secured credit cards to almost all irrespective of credit score, job profile, occupation, income or location.
Just like regular credit cards, credit cards against FD also offer reward points, discounts, gift cards, etc. on the credit card’s transactions. These cards also offer an interest-free period on credit card spends and levy finance charges on the non-repayment of the bill by their due dates.
Students, graduates, housewives or individuals with no or poor credit scores can apply for secured credit cards and earn rewards on them. These cards not only help to build a credit score but also the pledged FD continues to earn interest for you.
Read More: Pros and Cons of Secured Credit Cards
Tips to build/improve credit score with secured cards
Credit bureaus get information on defaults/delayed repayments of credit card outstanding from credit card issuers. These bureaus then mention such facts in your credit report which lowers your credit score accordingly. However, timely repayment of your secured and unsecured credit card bills would be considered a positive trait by the issuers and bureaus will steadily increase your credit score. Thus, it’s better to always treat your credit card like a debit card and use it to that limit where you can comfortably repay by the bill due date.
Let us walk you through some of the tips that you can use to improve or build your credit score:
- Repay your credit card by its due date
- Convert your dues into EMIs if you unable to repay outstanding by the due date
- Avoid taking multiple secured/unsecured credit cards within a shorter period
- Usually the credit limit is 70%-80% of the deposit. Top up your limit on reaching 75% of your credit limit
- Keep track of credit score at regular intervals and in case any error arises, report those errors to the credit bureau and the respective bank for rectification. A rectified credit report may register a higher credit score.
Factors to consider before applying for secured credit card
Make sure the secured card you choose has the best offers you need and also keep an eye on the terms and conditions of the credit card. Look into the following factors before applying to make the best use of the secured card:
- Fixed deposit amount, tenure, and FD interest rate
- Top offers that meet your purpose of taking the card
- Credit limit; Higher the FD amount, higher will be the credit limit
- Finance charges/revolving credit (charged when you fail to clear dues before the due date)
- Check the information on joining, annual or renewal fees
- Ensure that your card’s monetary value should be higher than other fees such as joining/annual fees
Additional Benefits of Secured Credit Card
- FDs liened for your secured credit card continue to earn interest for you
- Helps you to increase your liquidity by accessing funds without prematurely closing your fixed deposit
- Easy to get as approval rates for secured credit cards are much higher as compared to unsecured credit cards
- Helps to build credit scores for those with no credit history in the past or have a poor credit score
Build/Improve Credit Score with Step UP Credit Card
Step UP Credit Card co-branded with SBM Bank India Ltd, is a secured credit card issued against fixed deposits opened with SBM Bank (India) Ltd. The card is designed to build or improving the credit scores of individuals who are New to Credit (NTC) or have low credit score, inadequate income, location constraints, and job profiles. The card allows users to earn more than 6.55% p.a. interest from their SBM FDs for a tenure of 390 days.
One can apply for Step UP Credit Card across all locations in India as the application and onboarding process is completely digital. The annual fees is NIL. Apart from earning interest on FD, the cardholders can avail attractive Rupay card offers and simultaneously can earn 1 reward point on every Rs 100 spent. Additionally, no income verification or credit score check is required.
Top Secured Credit Cards in India
Tata Neu Infinity HDFC Bank Credit Card
Joining fee: ₹1499
Annual/Renewal Fee: ₹1499
Up to 10% value-back on Tata Neu spends
8 domestic and 4 international Priority Pass lounge access per year
Product Details
- 5% NeuCoins on all non-EMI spends at Tata Neu & its partner brands
- Additional 5% NeuCoins on select spends at Tata Neu app/website
- 1.5% NeuCoins on UPI, non-Tata brand and merchant EMI spends
- 1,499 NeuCoins after the first spend within 30 days of card issuance
- Low forex markup fee of 2%
IDFC FIRST WOW! Black Credit Card
Joining fee: ₹750
Annual/Renewal Fee: ₹750
Zero foreign exchange markup fee
Up to 50X bonus reward points on travel bookings
Product Details
- Up to 3 reward points per Rs. 150 on UPI spends
- 1% fuel surcharge waiver, up to Rs. 200 per month
- 25% discount on movie tickets, up to Rs. 100 per month, on the District by Zomato mobile app
AU NOMO Credit Card
Joining fee: ₹199
Annual/Renewal Fee: ₹0
Low forex markup fee of 0.99%
2 Reward Points per Rs. 100 on retail purchases
Product Details
- 500 Reward Points on retail spends of Rs. 25,000 in a quarter
- Additional 500 Reward Points on retail spends of Rs. 50,000 in a quarter
- 2 complimentary railway lounge access per quarter
IDFC FIRST EARN Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹499
Up to 8% bonus cashback on travel spends
1% cashback on UPI spends via IDFC FIRST Bank mobile app
Product Details
- 4% bonus cashback on all flight bookings via ‘Travel and Shop’
- 8% bonus cashback on all hotel bookings via ‘Travel and Shop’
- 25% off (Up to Rs. 100) on movie tickets, per month, on District by Zomato
SBM ZET Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹0
5% cashback on Amazon/Flipkart vouchers; 2% on UPI spends
Up to 20% off on Zomato, BookMyShow, Swiggy and Instamart
Product Details
- Up to 15% cashback on 80+ brands, like Dominos, PVR, Nykaa, Cleartrip, etc.
- Up to 7% interest on SBM Bank fixed deposit worth min. Rs. 2,000
- Lifetime-free secured credit card on RuPay network
Kotak811 DreamDifferent Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹0
4 reward points per Rs. 100 spent online
Rs. 1,000 bonus voucher on Rs. 72,000 annual spends
Product Details
- 1 reward point per Rs. 100 spent offline
- 3 months OTTPlay subscription and Rs. 250 Woohoo voucher as welcome benefit
- Fuel and railway surcharge waivers of up to Rs. 3,500 and Rs. 500 respectively every year
- Lifetime-free secured card offered against fixed deposit of min. Rs. 10,000
- Online card application process without any documentation
Axis Bank Privilege Easy Credit Card
Joining fee: ₹1500
Annual/Renewal Fee: ₹1500
10 EDGE reward points for every Rs. 200 spent
10,000 EDGE reward points every year as milestone benefit
Product Details
- Additional 10,000 EDGE reward points worth Rs. 2,000 on spending Rs. 2.5 Lakh in a year
- Up to 15% off on dining at 4,000+ partner restaurants under the Dining Delights Programme
- 1% fuel surcharge waiver (Max. Rs. 400 per month) on transactions between Rs. 400 and Rs. 4,001
Federal SimpliFi Fi Credit Card
Joining fee: ₹0
Annual/Renewal Fee: ₹0
3x rewards on every weekend spends
Up to 20% off on popular brands like Zomato, District by Zomato& BookMyShow on weekends
Product Details
- Earn interest of up to 6.7% p.a.
- 3x rewards on every weekend spends
- 2 Fi-coins on all weekdays spends
- Up to 20% off on popular brands on weekends
Axis Bank MY ZONE EASY Credit Card
Joining fee: ₹500
Annual/Renewal Fee: ₹500
4 EDGE reward points per Rs. 200 spent domestically
25% cashback on online and box office movie ticket purchases
Product Details
- 25% cashback on online and box office movie ticket purchases at registered merchants
- 1% fuel surcharge waiver on fuel spends between Rs. 400 and Rs. 4,000, capped at Rs. 400 per month
- 15% off on dining at partner restaurants via Dining Delights program
BOBCARD Prime
Joining fee: ₹0
Annual/Renewal Fee: ₹0
2 reward points for every Rs. 100 spent
1% fuel surcharge waiver of up to Rs. 250 per month on fuel spends of Rs. 400 to Rs. 5,000
Product Details
- 500 reward points on spending a min. of Rs. 5,000 within 60 days of card issuance
- Insurance of Rs. 15 lakh for air and Rs. 5 lakh for non-air personal accidental death
- 1% fuel surcharge waiver of up to Rs. 250 per month on fuel spends of Rs. 400 to Rs. 5,000
- Card issued against a fixed deposit worth Rs. 30,000 or more
