Credit cards have been popular in India for a long time. A vast segment of the population relies on credit cards for various needs and expenditures. It is important to note that multiple types of credit cards cater to different purposes and individuals. Its diverse offerings make it a big hit with specific user profiles. For those possessing a strong credit score and a steady income, acquiring approval for a favorable credit card is relatively straightforward.
Talking about different types of credit cards in India, both secured and unsecured, are among those cards designed according to the needs of individuals. Understanding their meaning and purpose is crucial to choosing the best one.
This blog post delves into the distinction between secured and unsecured credit cards in India. Exploring various aspects, such as definitions, benefits, and more, we shed light on what sets these two types apart.
Secured Credit Card vs. Unsecured Credit Card in India
Secured credit cards are among the top types of credit cards in India designed for those whose credit score could be better and who always get rejected for credit card applications. This rejection might stem from insufficient income verification or lower credit scores during application.
Acquiring a secured credit card involves providing collateral to the card issuer for approval. You can obtain a secure credit card by establishing an account with the bank or initiating a fixed deposit in the relevant bank account.
Instant credit card approval becomes achievable by swiftly opening a bank account. At par with a standard credit card, an unsecured credit card demands a robust credit score and a solid financial history from the account holder. Fulfilling all acceptance criteria is crucial to secure approval for an unsecured card, differing from its secured counterpart.
Attaining an unsecured credit card is a noteworthy achievement, as it negates the requirement for collateral on your part. This type of credit card stands distinct from secured ones by not necessitating any cash security deposit, providing a flexible and convenient financial tool.
How Do Secured and Unsecured Credit Cards Work?
Similar to conventional credit cards, secure credit cards offer familiar features. The credit limit on a secured card ranges from 75% to 85% of the fixed deposit amount. For instance, a fixed deposit of 1 lakh yields a credit limit of Rs. 75,000 to 85,000, escalating the credit cap alongside the FD amount.
On the contrary, an unsecured credit card necessitates a robust credit score ranging from 670-850. Securing approval for an unsecured card becomes likelier with a credit score exceeding 670. Interest rates on unsecured credit cards hinge on the borrower’s income, credit score, and other pertinent financial considerations. These aspects collectively shape the terms of an unsecured credit card’s usage.
Benefits of a Secured Credit Card
Being aware of credit cards meaning is essential to choosing the suitable one for you. Secured credit cards offer different benefits to their customers. From convenience of use to increasing credit score, its numerous benefits help it rank among India’s top types of credit cards.
Let’s understand its benefits here:
- You can easily get approved for secured credit cards. For approval, you must have a fixed deposit or bank account in a credit card bank.
- Using a secured credit card can increase your credit score. Using borrowed money in your credit limit and paying your pending debts on time can improve your credit score.
- A secured credit card offers an ideal interest rate on your fixed deposit.
- There will be no annual charges for secured credit cards, or they will be less than unsecured credit cards.
Which One Should You Use?
Both secured and unsecured credit cards possess distinct advantages tailored to different situations. Opt for a secured credit card if your credit score is more optimal and you have experienced frequent application rejections. This option provides a fitting solution. On the other hand, if you are a business owner boasting a strong credit score, obtaining approval for an unsecured credit card is relatively straightforward. Assess your circumstances and make an informed choice, selecting the type of credit card that aligns seamlessly with your needs and financial standing.
Read: How to Pay Your House Rent Using Your Credit Card?
Wrapping Up
The popularity of credit card usage has surged significantly due to its offerings and advantages. Individuals utilize credit cards to access financial assistance by borrowing funds in advance, responsibly repaying them before the due date. Our current blog post is tailored to help you in making the right decision while choosing between secured and unsecured credit cards. Delve into it and gain clarity on your criteria, pinpointing which credit card aligns best with your requirements.
