Secured Credit Card: If your credit score is bad and due to this you are not able to get a credit score from the bank, then in this situation a secured credit card can be helpful for you. Know here what are its benefits.
Secured Credit Card: If you are employed, your credit score is good and the bank feels that you can easily repay the credit card loan, then you get the credit card easily. But if your credit history is bad or credit score is in minus then your credit card application can also be rejected. In such a situation, a secured credit card can be useful to you. Know what it is and how it can prove beneficial for you.
What is secured credit card?
Generally the credit cards available are collateral free, that is, you do not have to deposit any kind of security for them. You are given a credit card based on your income and score. But you get a secured credit card in exchange for a collateral deposit. If you have an FD in that bank, then you can take a secured credit card in exchange for it. As long as the person has the secured card, he cannot close the FD account.
What is the limit of secured credit card?
Generally, the limit of secured credit card is kept at 85 percent of your fixed deposit. Meanwhile, the FD amount acts as collateral. You also keep getting interest on FD. But if the borrower is unable to repay the loan taken on credit card on time, then the bank has the right to recover the loan amount through your FD amount.
Benefits of secured credit card
- By making bill payments on time, you can improve your credit score. Due to which the chances of getting loan in future can be improved.
- Compared to regular credit cards, its interest rates are lower because it is given in lieu of FD.
- It is easier to get approval as it is given in return for collateral deposit. No extra charge has to be paid for this.
- By taking a credit card on FD, the card holder gets the option to increase his credit limit without any extra expense along with earning interest on the fixed deposit account.
