What to do if you are unable to get a credit card?

A low credit score or inadequate income is quite a hurdle in becoming eligible to own a credit card. Therefore, to provide this service to maximum individuals, banks have opened the option of secured credit cards. With relaxed conditions of eligibility, and minimal documentation, possessing a secured credit card can be quite easy which will not only help you to establish your credit history but also improve your credit score.

What are secured credit cards?

Banks issue secured credit cards against collateral in the form of Fixed deposits (FDs). These FDs act as a kind of security against the card issued to you. You can’t close them without surrendering your secured credit card.
And on your part, these cards are not dependant on your credit score, your monthly income or other conditions like your location. So in a way, these secured credit cards are really worthwhile and beneficial for both the bank and its customers.

The credit limit allowed on these secured credit cards by banks is usually up to 80-90% of the amount of the fixed deposit. At the same time, they provide as good services provided for regular credit cards, like reward points, cash back offers interest-free periods and also the conversion of your outstanding bill into EMIs. Hence, secured credit cards are most appropriate for those who are not able to use the benefits of a regular credit card due to any reason like unavailability of a good credit score, unrated employer, credit history, etc.
Major banks like Axis Bank, ICICI Bank, HDFC Bank, State Bank of India, Central Bank of India, DCB Bank and Kotak Mahindra Bank offer the facility of secured credit cards.

The Benefits of a secured credit card

One of the successful ways of improving a credit score is using your credit card for regular transactions.

  • This can further help you to attain a good financial life because your timely repayments always build up your credit score.
  • Furthermore, your asset-mix can also be improved once you regularly use your secured credit card.
  • It also provides an interest-free period of 50 days.
  • In the meanwhile, the FDs deposited by you are used by the bank and are anyway earning some interest for you.
  • You can also avail loan against these cards, with the provision of converting your card balance into EMIs.

Therefore, these secured credit cards offer quick credit access and can go a long way in building up your credit score and your financial history, apart from offering the benefits of a regular credit card.

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