A secured credit card is specifically designed for people who lack the necessary credit rating to avail an unsecured credit card. A secured card generally comes against fixed deposit investments in the name of the card owner.
With such cards, individuals can build their CIBIL scores, which in turn, should help them secure a typical credit card in the future.
The terms associated with a secured credit card are quite different from unsecured ones. Here are 5 things to consider before availing a secured card to ensure profitability.
1. Fixed deposit
Since availing a secured credit card requires a fixed deposit account, you must understand how FDs work. The amount you deposit is the benchmark on which the credit limit for your secured card depends.
2. Available credit limit for a secured credit card
The credit limit offered by financial organisations is known to vary according to your fixed deposit amount. Top financial institutions provide a low credit limit if you are applying for a credit card for the first time.
Nonetheless, you can opt for an increased credit limit by depositing more substantial sums in the FD account.
3. Rate of interest
Every credit card comes with an annual percentage rate (APR), which is charged on any outstanding balance. A secured credit card has a lower APR compared to an unsecured one. The fixed deposit you provided as collateral lowers the rate of interest.
Choosing the company that charges low interest rates is vital, even if you never intend to carry your balances to the next billing cycle. In order to get the most out of your Bajaj Finserv RBL Bank SuperCard keep an eye out for introductory offers that charge 0% interest for a limited period.
Top financial institutions offer a variety of benefits for a secured credit card, making it more accessible to individuals availing it for the first time. Here are a few benefits to get the most out of your credit card:
- According to experts, financial organisations do not offer unsecured credit cards to individuals with low or no credit history. However, in case of secured cards, the financial liability to the lender is compensated by the fixed deposit, and they can avail the card.
- Even though the fixed deposit is considered as collateral, you will be earning a steady applicable interest on the amount.
- Top financial institutions can increase the credit limit on your secured credit card or even upgrade to an unsecured one if you use it responsibly.
- Upgrade to an unsecured credit card in which case your fixed deposit will be refunded.
- Build your credit score.
- Take advantage of low annual percentage rate.
Knowing the various charges levied on your credit card will help you better plan your finances in the future. Here are a few of them:
- Annual fees.
- Late payment fees.
- Foreign transaction charges
- Balance transfer fees.
These are some of the most important things to know before applying for a credit card.
Bajaj Finserv provides pre-approved offers to avail credit cards. These offers are available on a variety of products, such as personal loans, home loans, business loans etc. Check your pre-approved offers today only by providing your name and mobile number.
A secured card is considered an optimal way to build your credit history. You can even opt for a credit card online in a few simple steps. Nonetheless, it is advised that you review these five things before availing the card.