Best secured credit cards for poor credit: Top 4 picks

Getting a credit card primarily requires a good credit score for issuers to approve credit card applications. A credit score signifies the creditworthiness of a credit card user; hence, it becomes an essential factor for issuers to determine your ability to repay credit card dues. There is a chance of rejection of the application if you have a poor credit score or lack of credit history.

However, having a poor credit score or no credit history does not mean you cannot get a credit card. Secured credit cards are a suitable option for those who struggle with low credit scores.

What is a secured credit card?

A secured credit card requires collateral, primarily a fixed deposit, as security to get approval for the card. This card which is issued against a fixed deposit functions like a regular credit card.

Benefits of secured credit card

1. Improve credit score: Secured credit cards are mostly opted by those who have poor credit scores that do not allow them to get an unsecured credit card. By getting a secured credit card, you can build a credit score, by making timely bill payments. However, if you fail to pay bills on time, your credit score will deteriorate further.
2. Receive interest: Depositing a fixed amount against your credit card will earn you an interest rate. Therefore, through a single fixed deposit, you can get a credit card as well as earn interest on it.
3. Quick and accessible: Compared to an unsecured credit card, it is easier to get a secured credit card as it essentially needs a fixed deposit. It also has less documentation work comparatively that helps to get this card quickly.

Drawbacks of secured credit card

1. Credit limit: In a secured credit card, the issuer determines the credit limit based on the fixed deposit, typically around 80 per cent of the total deposit amount. Therefore, the credit limit will be lower if your fixed deposit amount is lower.
2. Access to money: Before getting a credit card, you will always require sufficient funds to deposit to the card issuer against which you need a credit card.
3. Fixed deposit issue: The amount deposited as a fixed deposit remains locked in the account. You can use this amount only after you close your credit card account. Banks may convert your fixed deposit amount into a regular account only if they feel your credit card account is good.

Best secured credit card options available in India

SBI Unnati Credit Card

This card requires a minimum deposit of ₹25,000. There are zero annual fees for the first four years and ₹499 will be charged from the fifth year.

Features

1. If you spend over ₹50,000, you will get ₹500 cashback within 15 days.
2. Get a 1 per cent fuel surcharge waiver on every fuel transaction between ₹500 and ₹3,000.
3. This card provides a credit limit of up to 80 per cent of the total fixed deposit.

ICICI Instant Platinum Credit Card

This card requires a minimum fixed deposit of ₹50,000, and the minimum tenure for fixed deposits is 180 days.

Features 

1. On spending over ₹100 on every retail purchase, except fuel, get two reward points.
2. If you spend over ₹100 on every utility and insurance category, you get one reward point.
3. On spending up to ₹4,000 at HPCL pumps, get a one per cent fuel surcharge waiver.

Axis Bank Insta Easy Credit Card

This card requires a fixed deposit in the range of ₹20,000 to ₹25 lakhs. There is no joining fee and annual fee levied on this card.

Features 

1. You will get a credit limit of up to 80 per cent of the total fixed deposit amount.
2. A one per cent fuel surcharge waiver will be available at all outlets across India.
3. Up to 15 per cent discount on dining.

Kotak Mahindra Bank 811 #DreamDifferent Credit Card

This Kotak Mahindra Bank card requires a minimum fixed deposit of ₹5,000. It does not have an annual or joining fee.

Features 

1. On every online expense of over ₹100, get four reward points.
2. On every other expense over ₹100, get one reward point.
3. On fuel transactions between ₹500 to ₹3,000, get a one per cent fuel surcharge waiver.

In conclusion, if you have a poor credit score or credit history, it is advised to pay your dues on time to avoid interest charges or additional fees before planning to get a secured credit card, as a new card will also require timely payments to improve your credit score. By not clearing previous dues, getting a secured credit card will add to the expenses that might affect your financial health.

(Note: Using a credit card carries its own set of risks)