Is your credit score below 670?

Don’t worry. You can still own a credit card.

Yes, a secured credit card!

Unlike regular credit cards, secured credit cards do not mind you having a low credit score. In fact, they help build your credit score and earn rewards as you spend.

Not heard of secured cards before?

That’s because even though secured cards have been in existence for more than 20 years, it comprises less than 2% of the cards market share in India.

But that scenario is rapidly changing now.

Fintech firms like M2P have taken the initiative to enable financial inclusion by simplifying secured credit card issuance and program management. Banks like SBM, SBI, Kotak, RBL, ICICI, and other fintechs like Wizi, Slice, and a few others are issuing secured cards to customers with less-than-ideal credit scores.

What is a Secured Card?

A secured card is a credit card that allows you to spend in a risk-free and rewarding manner. They are backed by a fixed deposit (FD) that is used as collateral by the issuing bank. A secured card earns you rewards not just in the form of cash backs but even gold.

Consider you want to purchase a secured credit card. All you need is a fixed deposit as supporting collateral. The FD can be an amount of your choice that will act as a credit limit for your card. The fixed deposit serves as a kitty for card issuers to rely on when there is any default in your payments.

Wonder if a secured credit card is a good fit for you?

Here are 3 compelling reasons you need to know.

3 reasons why secured cards are a good fit for you

Regular credit cards have been overshadowing the secured cards market for a long time now.

But not anymore!

People reach out to companies that issue secured cards to enjoy the following spend-worthy benefits.

1. Earn while you spend

As India’s retail inflation rate rose to 4.48 % this year (as of October 2021), saving while spending seems like an impossible task. But, secured cards are here to bridge those gaps.

Secured cards help you earn interest on your fixed deposits while you spend from your card. Apart from the rewards like cash back and airline miles, secured cards can also earn you tangible rewards like digital gold for every spend.

For example, ICICI’s coral card earns you double reward points on supermarket and dining transactions. Another noteworthy example is Gild from Wizi, India’s first secured card that rewards 2% gold for every spend.

2. Build or improve credit score

Getting secured cards is the easiest way to improve your creditworthiness. It helps you build a good credit history and even improve your existing negative credit score by making timely payments. Even in case of missed payments, the amount will be deducted from your security deposit. So, there is no negative impact on your credit score.

Once you have stepped into the world of secured credit cards, the credit bureaus get notified of your payment history within 30–45 days. This is how your credit score will improve over time, and you can get thumbs up for other credit options or loans in the future. These cards are really great for those who cannot get hold of a lender because of their bad credit score.

Take a look at credit score ranges to know how issuers decide and approve your credit line.

3. Spend at zero risk

Secured cards give their users zero-risk spending options. Present-day customers enjoy using secured cards more than unsecured cards because of “the investment + saving + rewarding mechanism.”

Secured cards are considered featherweight as you can also start off with a smaller security deposit and gradually increase on a monthly basis. This way, you can avoid getting into debt and save your credit deposit from getting deducted in case of missed payments.

It also poses no risk for the card issuers as the fixed deposit or collateral reduces the credit risk. So, it is risk-free for issuers as well, as they can recover the outstanding amount from FD in bad situations.

Rewarding Savior

Secured cards are a savior for people who face challenges with personal finance management. It allows you to make stress-free card payments, get tangible rewards, improve credit scores, and plan future expenses within the limit. Secured cards also help build your financial health as it is backed by a cash deposit for security.

Having known these top reasons, you know what to do next.

Yes, get your own secured card.

Happy Spending! Happy Saving!

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