In this blog we will talk about what is a secured credit card? and how it works. we will also discuss all the related queries regarding secured credit card. So without wasting time lets gets started.
What is a secured card? (Basic definition)
Secured credit cards require a cash deposit to open an account. The credit card issuer is less at risk by having the deposit. If you fail to pay your bill on time, the issuer may take your deposit. These cards are open to anyone with poor credit or no credit.
Secured credit card: How it works?
Secured cards function exactly the same as unsecured cards once the initial deposit has been paid.
- They can be used wherever credit cards are accepted including online.
- You receive a bill each month and pay for any purchases. Your deposit cannot be used to purchase. Below, you can see the differences between secured and pre-paid cards.
- If you have a balance, interest is charged.
- Credit can be built or rebuilt by responsibly using your card and paying your balance promptly.
Major credit card issuers offer both unsecured and secured cards. Although annual fees are not uncommon, they shouldn’t exceed $50. Among our top-rated secured cards, you will find many options that have no annual fees.
A secured card is a great way to build your credit if you aren’t eligible for an unsecured loan. It’s just as important to be responsible for a secured credit card as any other loan or bill on your credit report.
What is the credit limit on a secured credit card?
Secured credit cards have a credit limit of 75% to 85% of the FD amount. If you have a Rs.1 lakh fixed deposit, your credit limit might be Rs.75,000 to R.85,000. The credit limit of your secured credit card will be higher if your FD is higher than your credit limit.
How to use a secured credit card with a $200 limit?
- First, make a $200 refundable security deposit to establish your credit limit and secure a secured credit card that has a limit of $200.
- You can then use the card to make small purchases each month and pay the balance by due date.
- When you close your account, or when you receive an upgrade offer, the $200 will be refunded to you.
How much will a secured credit card raise my score?
- You could see a 200-point increase in your credit score if you manage your secured credit card properly.
- You can open three secured credit cards with a credit builder loan and have bad credit. This will allow you to get into the 700s in 12 months.
Secured Credit Card: Advantages and Disadvantages
- Quick and easy approval: Just walk in to the branch and open a fixed deposit. Once you are done, you can walk out with your credit card. There is no income proof, background check, or anything. Your credit card account will be opened with the same identity and proofs of residency that you used to open the FD.
- Re-establish credit: It doesn’t matter if your credit score was low or high. You can rebuild or build your credit with a secured credit credit card. You must use the card to its maximum limit and pay the dues in full. You can quickly build your credit rating by being consistent with your card use and making timely bill payments. A secured credit card may be available to you once you have established a good credit score.
- Earn interest on your FD You can earn decent interest depending on how long you deposit.
- Secured credit cards in India come with low or zero annual fees. Many Indian banks offer secured credit cards with low or zero annual fees. The minimum deposit required for the cards is Rs.10,000, making them a viable option.
How do I close a secured credit card?
A secured credit card can be closed at any time as long as your payments are current and there is no outstanding balance. Contact your card issuer to do this.
You should receive your deposit back after you close a secured card. This will include any fees imposed by your card issuer. If you pay your monthly payments on time, your card issuer might offer to convert your secured card to a regular card.
How old do you have to get a secure credit card?
i hope you like our blog what is a secured credit card and If you are interested to know about how old do you have to get the secure credit card or any other type of credit card( i.e. aspire credit card ) then you can read our blog
Bottom line(What is a secured credit card?)
A secured credit card is a great way to get started, whether you are new to credit cards or trying to improve your credit score.
You may find it easier to maintain your credit utilization by choosing a card that allows you to make a large deposit and then receive a matching high-credit limit. However, be careful to weigh the benefits of having a higher limit against other immediate disadvantages such as high fees or APRs.