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What Is a Secured Credit Card? How It Works
Getting approval for a regular credit card usually depends on your credit score. If you’re just starting out or have a low score, a secured credit card can help you bridge the gap. Secured credit cards require you to open a Fixed Deposit with the bank, which acts as collateral. Most top banks in India, such as SBI, HDFC, and ICICI, set your credit limit at 80% to 90% of that deposit amount. This deposit is held in a separate account and earns FD interest at the bank’s prevailing rates.
The bank uses this deposit as security to recover any unpaid dues if you fail to pay your bill. Most people use a secured credit card to build or improve their credit score. After roughly 6 to 12 months of disciplined use, banks offer to upgrade you to a regular, unsecured card and release your deposit.
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Last Updated: 28 March 2026
How Does a Secured Credit Card Work?
Think of it this way. You deposit ₹20,000 with the bank. Then the bank gives you a card with a limit close to that amount. You use it like any other card, for shopping, paying bills, travelling, everything. At the end of the month, you pay your credit card bill. In case of:
- Pay the full amount – no interest
- Pay partially – interest applies
- Missed payments – penalties, and in extreme cases, the bank can adjust it against your deposit
So while it’s backed by your money, it still behaves like a regular card.
Which Banks Offer Secured Credit Cards?
If you’re trying to find what is the best secured credit card to build credit, here are some commonly available options:
| Card Name | Minimum FD Amount | Credit Limit | Annual Fee | Highlights |
|---|---|---|---|---|
| IDFC FIRST WOW | ₹20,000 | 100% of FD | Lifetime Free | Zero forex markup, earn FD interest + 4X rewards, no income proof needed |
| Kotak 811 Dream Different | ₹10,000 | Up to 90% of FD | Lifetime Free | No joining/annual fee, high cash withdrawal limit (90%), basic rewards |
| SBI Card Unnati | ₹25,000 | Up to 80% of FD | Free (First 4 Years) | ₹499 from 5th year, ₹500 cashback on ₹50,000 annual spend |
| Axis Insta Easy | ₹20,000 | Up to 80% of FD | Nil / Low | Guaranteed approval, dining discounts, and quick issuance |
| BOBCARD Prime | ₹15,000 | 100% of FD | Lifetime Free | Simple rewards (2 points per ₹100), zero liability on lost card |
What are the Benefits of Secured Credit Cards?
Here are the benefits of having a secured credit card:
- Easier approval: No strict credit score requirement. The deposit reduces the bank’s risk.
- Builds credit history: Regular usage and timely payments can improve your score within months.
- Upgrade path: Many users move from secured to regular cards in 6-12 months.
- Earn on your deposit: Since it’s usually an FD, cardholders earn interest on it.
- Works like a regular card: The card offers online payments, rewards, EMI options and more.
- Good for first-time users: If you’ve never used credit before, this is the best starting point.
What are the Eligibility Criteria for a Secured Credit Card?
The eligibility criteria for a secured credit card are simple:
- Age: 18 to 65+ years
- Citizenship: Indian (NRI options also available with some banks)
- Fixed deposit with the bank
- Basic KYC
Who usually applies?
- First-time earners
- Students
- Self-employed individuals with low income
- People rebuilding their credit
Income is not always the deciding factor here. The deposit is.
How to Apply for a Secured Credit Card?
Borrowers can apply for a secured credit card through the Urban Money website:
- Visit the official Urban Money website
- Select “Credit Card” from the main menu.
- Browse and compare different secured credit card options
- Click Apply Now against the selected option.
- Enter basic details such as name, email and mobile number
- Verify identity using the OTP sent to the registered number
- An Urban Money specialist will contact you to guide the process.
Once approved, you will receive card dispatch updates.
Secured vs Unsecured Credit Card
People usually get confused between a secured and an unsecured credit card, so here’s a clear comparison:
| Factor | Secured Credit Card | Unsecured Credit Card |
|---|---|---|
| Backing | Fixed deposit required | No deposit |
| Approval | Easy | Depends on credit score |
| Limit | Based on the deposit | Based on income + credit history |
| Risk | Lower for the bank | Higher for the bank |
| Purpose | Build or repair credit | Spend and earn rewards |
Can a Secured Credit Card Improve Your Credit Score?
Yes, a secured credit card can improve your credit score if you use it properly. A few habits make all the difference:
- Always pay on time: Payment history carries the most weight.
- Don’t max out your limit: Try to stay below 30% usage.
- Use the card regularly: Small, consistent usage is better than no activity.
Do this for 6-9 months, and you’ll usually see movement in your score.
What are the Things to keep in Mind as a secured credit card holder?
Here are some things to keep in mind as a secured credit cardholder:
- Your limit is tied to your deposit
- Interest still applies if you don’t pay in full
If you plan to convert spends into EMIs, check the numbers first using a Credit Card EMI Calculator.
FAQ About Secured Credit Card
What is a secured credit card in India?
It’s a card issued against a fixed deposit. Your limit is based on that deposit.
How does a secured credit card work?
You deposit money, set a limit, use the card, and repay monthly, just like any other card.
Can I get EMI on a secured credit card?
Yes, most secured cards allow EMI conversions on eligible purchases.
What is the maximum limit on a secured credit card?
Usually, up to 80% to 100% of your fixed deposit.
Can I upgrade to an unsecured card later?
Yes, with good usage, banks often offer upgrades.
What are the disadvantages of secured credit cards?
You need to block your own funds as a deposit, and rewards may be limited compared to premium cards.
Which is the best secured credit card to build credit?
Cards from IDFC FIRST, SBI, and Axis are commonly used. The best one depends on your deposit amount and usage.
