Secured Credit Card – What Do They Mean?

If you want a credit card, you need a good credit score! But, what if you don’t have it? What if your credit ratings are closer to 300 as opposed to the 900-mark on the CIBIL rating scale? You can still apply for a Secured credit card and use it for seamless PoS or online shopping.

What is a Secured Credit Card?

You can get a Secured credit card after opening a fixed deposit. Think of this deposit as collateral. Usually, your secured credit limit is the same or a certain percentage of as the amount backed by the fixed cash deposit you made at the time of application.

In terms of usage, there is no difference between a regular credit card and a Secured credit card. Both of them come with set limits and are used for domestic as well as international transactions. A Secured credit card helps you build good credit history or improve upon a previously bad one.

Secured credit cards reduce the issuer’s liability in case of a default. The issuing authority can simply deduct the amount defaulted by the cardholder from the deposit made in case their bill payment doesn’t come through.

As mentioned earlier, people with a low CIBIL score or individuals who are yet to build their credit history should opt for this alternative.

How Quickly Can Your Credit Score Improve with a Secured Credit Card?

For starters, you must repay your bills on time to begin your journey towards a good credit score. If you have a poor credit history or are starting afresh, it can take anywhere between 6 months to a year to build a high score.

What is a high CIBIL score? The CIBIL scale ranges from 300 to 900 points. Banks usually consider a CIBIL score above 750 as an excellent denominator for judging the creditworthiness or repayment capacity of an applicant. A 700 score is also good if you wish to apply for an unsecured credit card.

Further, the minute your credit rating improves, you can transfer your Secured Credit card to an unsecured line of credit.

How to Quickly Improve Your Credit Score With Your Secured Credit Card?

If you have deposited a specific amount as a Fixed Deposit and availed of a Secured credit card, here is how you can use it effectively to build or rebuild a solid CIBIL score.

Keep your credit utilization rate low by using your card sparingly. Charge only a few purchases each month. This does not mean you shouldn’t use it at all! Only when you pay for expenses sparingly, in the beginning, using your Secured credit card, will you begin accumulating CIBIL points.

Do not default on your bill payment. Avoid paying the minimum amount and pay the full amount, every month. This way, you won’t have to pay any interest on the remaining balance.

Make sure to check your CIBIL score once a month. Sometimes, due to good credit card usage practices, your credit rating will go up quicker than anticipated. When that happens, you can either continue using the Secured Credit card however you like or request your issuer to get you an unsecured one.

The Bottom Line

Are you planning to switch from a Secured credit card to an unsecured credit card? If so, avail of some of the best perks and privileges offered by IndusInd Bank credit cards. You can choose from types of cards – Legend, Pinnacle and Crest. While all of them offer excellent reward redemptions, and a host of lifestyle and entertainment benefits, choose a credit card that meets your requirements.

Click here to compare all cards and apply for a credit card online today!

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Privacy & Cookies Policy