Top Secured Credit Cards for Building Your Credit
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If you’re new to credit, rebuilding your financial profile, or have a limited credit history, secured credit cards can be one of your best tools to get started. Unlike traditional credit cards, secured cards allow you to use your own money as security (a fixed deposit) to unlock a credit line helping you build credit while enjoying the benefits of a card.
What Is a Secured Credit Card?
A secured credit card is a type of credit card backed by a fixed deposit or security deposit you place with the issuing bank. Your deposit acts as collateral, and in return the bank gives you a credit limit (usually equal to or slightly higher than the deposit).
For example, if you place a ₹20,000 fixed deposit, you may get a credit limit of ₹20,000 on your secured card. This reduces risk for the bank, making it easier for people with limited or poor credit histories to qualify.
Unlike unsecured cards, which are granted based on credit history and income, secured cards use your deposit to guarantee repayment.
Why Secured Credit Cards Matter
Secured credit cards are valuable for several reasons:
1. They Help You Build or Rebuild Credit
For people with no credit history or a low credit score, secured cards provide a foot in the door. On-time payments and responsible usage help improve your credit score over time.
2. Easier Approval
Because your deposit secures the card, banks are more likely to approve secured cards even for first-time or fair/poor-credit applicants.
3. Controlled Spending
Because the credit limit is tied to your deposit, you can’t accidentally overspend too far beyond your means.
4. Gateway to Better Cards
If you use the secured card responsibly, many banks offer a pathway to upgrade to an unsecured card with higher limits and better perks.
5. Access to Card Benefits
Secured cards still provide benefits like rewards, cashback, online and offline acceptance, EMIs, and standard credit card convenience.
How Secured Credit Cards Work
- You submit a fixed deposit with the bank (as security/collateral).
- The bank issues a secured credit card with a credit limit based on your deposit.
- You use the card like a regular credit card - online and offline.
- Every month, you receive a statement and must pay at least the minimum due.
- On-time payments reflect positively on your credit bureau report.
- After responsible usage (typically 6–12 months), you may be eligible to upgrade to an unsecured card.
The security deposit protects the issuer if you default, which is why these cards are easier to approve and often recommended for credit building.
Secured vs Unsecured Credit Cards: What’s the Difference?
| Feature | Secured Credit Card | Unsecured Credit Card |
|---|---|---|
| Security Deposit | Required | Not required |
| Approval | Easier with deposit | Requires good credit/income |
| Credit Building | Helps build credit | Standard credit building |
| Credit Limit | Based on deposit | Based on creditworthiness |
| Rewards & Perks | Varies | Often richer |
| Upgrade Path | Often possible | Not applicable |
In essence, secured cards are entry-level or credit-rehab tools, while unsecured cards are for those with good or excellent credit histories.
Who Should Use a Secured Credit Card?
- First-time credit users
- Students entering financial life
- People with fair credit (650–699)
- People with poor credit scores looking to rebuild
- Individuals rejected for unsecured cards
- Anyone wanting a controlled credit-building strategy
These cards are particularly useful if you want to establish a credit history or recover from past mistakes.
Key Features of Secured Credit Cards
Credit Limit Based on Deposit
Your credit limit is usually equal to or a percentage of your fixed deposit with the bank.
Standard Grace Period
Like unsecured cards, you usually get a grace period (interest-free) if you pay your full balance by the due date.
Earn Rewards or Cashback
Many secured cards now include basic rewards, cashback, or partner offers especially on everyday spends.
Online & Offline Acceptance
Use secured cards on e-commerce platforms, bills, payments, travel bookings, and retail outlets.
Credit Building Support
Regular, timely payments help build your CIBIL/credit bureau score.
Typical Fees & Charges to Know
- Annual/renewal fees - charged yearly (may be waived first year)
- Interest charges - if you carry a balance past the due date
- Late payment fees - penalty if you miss the minimum payment
- Cash advance fees - on ATM cash withdrawals
- Foreign exchange fees - if used internationally
The key is to manage responsibly and avoid interest by paying in full every month if possible.
Benefits of Using a Secured Credit Card
Build or Rebuild Your Credit Score
On-time payments and low credit utilisation boost your creditworthiness.
Easier to Get Approved
Security deposit reduces risk for the bank, improving approval chances.
Controlled Spending Environment
Your credit line is limited, helping you avoid excessive debt.
Useful for Everyday Purchases
Use the card for groceries, bills, online shopping, travel, subscriptions, etc.
Gateway to Better Credit Products
Responsible usage often leads to unsecured card upgrades and better offers.
How to Choose the Best Secured Credit Card
1. Credit Limit
Look at how your deposit translates to your usable credit. Some banks give a higher limit than the invested amount.
2. Fees & Interest
Compare annual fees, late charges, and interest rates - lower is better.
3. Rewards & Cashback
Some secured cards offer rewards on spending. Even modest rewards can add up over time.
4. Upgrade Options
Cards with upgrade pathways to unsecured versions are more valuable long-term.
5. Customer Support & Digital Tools
Check for app access, mobile alerts, statements, and payment reminders, essential for credit building.
How Secured Credit Cards Help Build Your Credit Score
Your credit score is influenced by:
- Payment history (most important)
- Credit utilisation ratio
- Length of credit history
- Credit mix
- Recent enquiries
Secured cards help in several ways:
On-Time Payments
Every on-time payment shows lenders you’re reliable, this improves your score quickly.
Low Utilisation
If you use only part of your available limit, your credit utilisation ratio stays low, which boosts your score.
Building History
Regular usage and repayment begin your credit footprint, which is necessary for future loans or better cards.
Using Secured Cards Responsibly: Tips & Best Practices
To get the most value and improve your credit score:
Pay Your Balance Fully Each Month
This avoids interest and reflects strong credit behaviour.
Track Your Spending
Use card summaries or mobile apps to stay aware of your expenses.
Keep Your Credit Utilisation Low
Aim to use 30% or less of your available credit — this helps your credit score.
Set Payment Reminders
Autopay or reminders prevent late payments, which harm your score.
Use the Card Regularly
Consistent usage with full payment builds credit faster than rare usage.
Secured Credit Card Use Cases
Here’s where secured cards are especially helpful:
First Credit Building
For students or people new to credit, secured cards are a start point.
Credit Score Recovery
If your score dropped due to past issues, secured cards provide a controlled path to rebuild.
Guarded Spending
Because limits tie to deposits, secured cards discourage overspending.
Gateway for Better Cards
Banks often upgrade responsible secured card users to unsecured premium cards with richer perks.
Secured Credit Cards for Different Users
| User Type | Best Approach |
|---|---|
| Students | Low fee secured card with basic rewards |
| New to Credit | Secured start + credit building strategy |
| Fair Credit Score | Secured card with upgrade path |
| Rebuilding after Missed Payments | Secured + strict repayment discipline |
| Controlled Spending Needs | Secured limits tied to deposits |
Each situation benefits from a secured card, as long as you use it responsibly.
Frequently Asked Questions (FAQs)
1. What credit score is needed for secured cards?
Secured cards focus more on deposits than credit score, making them accessible even with fair or limited credit.
2. Does a secured card report to credit bureaus?
Yes — responsible use (on-time payments and low utilisation) is reported and builds your credit score.
3. Do I lose my deposit if I default?
The bank may use your deposited funds to recover outstanding dues if you default, which is why responsible use is
important.
4. Can I upgrade to an unsecured card later?
Yes — many issuers offer upgrades after 6–12 months of responsible usage.
5. Can I use secured cards internationally?
Most secured cards work wherever credit cards are accepted, but check foreign transaction fees.
Why Compare Secured Credit Cards on Credyfi
Credyfi helps you:
- Find secured card offers personalised for your credit profile
- Compare deposits, limits, fees, benefits, and upgrade options
- Understand costs vs benefits clearly
- Apply with higher approval chances
- Track offers from multiple issuers in one place
Instead of checking bank sites one by one, Credyfi simplifies discovery and comparison so you choose the best card for your needs and credit goals.
Final Thoughts
Secured credit cards are not second-class financial tools. They are strategic, empowering, and essential for anyone building or rebuilding credit. With responsible usage, low utilisation, on-time payments, and mindful spending, you can:
- Establish strong credit history
- Improve your credit score
- Qualify for better cards and loans
- Earn rewards or cashback on your everyday spends
Whether you’re a first-time credit user, a student, or recovering from past credit challenges, a secured credit card could be your gateway to better financial standing.
Ready to find the best secured credit card for your needs? Explore personalised secured card offers on Credyfi and start building credit smartly today.