Credit cards can be used to carry out a number of transactions including payment of bills, online shopping, fuel expenses, etc. There are basically two types of credit cards available in the market, i.e., secured and normal. Banks allow credit cardholders to spend the money first and then pay the amount every month at the end of the billing cycle. Such cards are unsecured credit cards as no collateral is pledged against these cards whereas secured credit cards are provided only against collateral such as fixed deposits or any other kind of savings with the bank.
Assets provided as collateral against these secured credit cards may be forfeited by the bank or the lender in case of non-payment of the billed amount.
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What is a Secured Credit Card?
Secured credit cards work a lot like normal credit cards. The primary difference is that a secured credit card is provided against collateral, such as fixed deposits to lower the risk level for card issuers.
Secured credit cards are beneficial for people who have no or bad credit history. Therefore, it is one of the easiest ways to improve your credit score while availing the benefits of a credit card. These cards are offered against a fixed deposit which reduces the risk for credit card issuers. However, if you don’t pay your bill on time, the credit card issuer can take the money from your deposit.
How does a Secured Credit Card Work?
The most important factor of a secured credit card is that it is issued only against some kind of fixed deposit which the customer has in bank or any financial institution. It is basically issued to those customers who are unable to get normal credit cards because of the current income criteria or bad credit history. Therefore, these cards are secured as the bank with which the deposit has been made has full right to liquidate the deposited amount in order to recover your debts if there is a situation of default on the payment terms.
The customer holding this kind of credit card has to continue with the fixed deposit with the bank till he/she uses this secured credit card. Usually, the bank offers such customers a maximum cap of around 85% against the deposit with the bank. Hence, these cards work very much similar to those of normal credit cards and the cardholder can also earn interest on the deposit with the bank or any of the financial institutions.
Benefits of Secured Credit Cards
Secured credit cards come with lots of benefits for their customers or cardholders. Some of them are as follows:
- Easy for those with no credit history: People who do not have a credit history can get this card to start building a credit history which makes it easier for them to get loan approval in future
- Increase the credit limit as well as earn interest on the Fixed Deposit: Customers who opt for a secured credit card need not pay anything extra other than the processing fee. This card can help cardholders to increase their credit limit as well as earn interest on their fixed deposits.
- Build good credit history: Banks normally issue credit cards to those customers who have a good credit record or history. Therefore, with secured credit cards, an individual can work on building a good credit history even if he or she is not having a normal credit card. This secured credit card can also help an individual to build a good credit score by paying bills on time.
- Increase chances of low-interest loans: When you have a number of financial products offered by the bank, the bank tends to offer you loans at relatively lower rates of interest, be it a personal loan, auto loan or a home loan.
StepUp Credit Card: Paisabazaar’s Secured Credit Card
Issued by SBM Bank (India) Ltd, in association with Paisabazaar, StepUp credit card is a secured card provided against the fixed deposit opened at the time of card application. You can improve your credit score via this credit card. It is best suited for those who wish to own a credit card but are unable to qualify for the same.
Features of StepUp Credit Card
Below mentioned are some of the key features of StepUp Credit Card:
- Joining Fee: It comes with a low joining fee of Rs. 500, excluding taxes
- Renewal/Annual Fee: From second year onwards, an annual fee of Rs. 250 will be charged
- Interest on Fixed Deposit: A comparatively higher interest rate of 7.1% on your fixed deposit
- Interest-Free Period: The interest-free period ranges from 20 to 50 days
- Credit Limit: The credit limit of this card is 100% of your fixed deposit amount
- Rewards: Decent rewards are given on your spends
How to apply for StepUp Credit Card?
To apply for this credit card, you can follow the below-mentioned steps:
- Visit Paisabazaar’s StepUp Credit Card Page
- Click on ‘Apply Now‘
- Fill in the form on the redirected page with your KYC details
- Complete your Digital KYC by uploading your Aadhaar Card
- Pay for the selected Fixed Deposit plan from your verified savings account
- Access your Step Up virtual card immediately
- Get your physical StepUp Credit Card delivered to your home
Other Secured Credit Cards
A few of the popular secured credit cards are mentioned in the table below:
| Credit Card | Annual Fee | Fixed Deposit Amount | Best Suited For |
| ICICI Bank Coral Credit Card | Rs. 500 | Rs. 30,000 | Entertainment, Travel |
| ICICI Bank Instant Platinum Credit Card | NIL | Rs. 20,000 | Dining, Entertainment |
| ICICI Bank Rubyx Credit Card | Rs. 2,000 | Rs. 75,000 | Travel, Shopping |
| SBI Advantage Plus Card | Rs. 500 | Communicated at the time of sourcing | Building Credit Score |
| SBI Card Unnati | NIL (first 4 years) Rs. 499 (5th year onwards) | Rs. 25,000 | Rewards, Fuel |
| Kotak DreamDifferent Credit Card | NIL | Rs. 10,000 | Entry-level Consumers |
FAQs
Q. My bank has refused my credit card application. How can I get a credit card easily?
A. Banks often refuse credit card applications if the applicant does not fulfill the criteria. In case if your application is declined by the bank, you can try to apply for a secured credit card.
Q.I do not have a credit card. Can I get a secured credit card?
A. Yes, you can avail a secured credit card against the fixed deposit in the bank.
Q. I do not have a fixed deposit in the bank. How will I get the secured credit card?
A. You will have to invest in a fixed deposit at first and then you can apply for a secured credit card with the bank.
Q. What is the credit limit offered on the secured credit card?
A. The credit limit offered on the secured credit card is up to 80 – 85% of the fixed deposit done with the bank.
Q. I want to get a higher credit limit. What should I do to get a higher limit on my credit card?
A. You should invest a higher amount in the fixed deposit. The more you invest more are the chances of getting a higher credit limit on your secured credit card.