What would you do when you do not have a credit history or a foul one and intend to acquire a bank card? Extra probably than not, your bank card utility will get rejected. However as they are saying — there’s at all times a lightweight on the finish of the tunnel for the optimists. Such candidates can go for secured bank card whereby a credit card is issued in opposition to a money deposit that works as a collateral.
This implies in case you have opened a deposit of ₹5 lakh, then you’ll be entitled to a secured bank card of equal quantity. You should use this bank card properly, construct a good credit history that can make you eligible for an unsecured bank card at a later stage.
So, allow us to take one factor at a time.
What’s a secured bank card?
A secured bank card is a card supplied in opposition to the collateral or safety of cash. The money deposit is safety that can be utilized in case the consumer defaults on bank card fee. The restrict of bank card identical as the quantity of safety. Somebody who provides a safety of, say, ₹3 lakh is issued a bank card of equal quantity. That is primarily seen as a precursor to procuring an unsecured, or an everyday bank card.
Who ought to go for it?
As talked about above, this card must be opted for by somebody who both doesn’t have a credit score historical past, or a foul one due to some monetary difficulties.
So, a secured bank card is supposed for the next customers:
A. Somebody who has began to earn or is a pupil. The one possibility for such an individual to get a bank card is to get a secured one.
B. An individual who confronted some critical monetary difficulties within the latest previous due to which he couldn’t stay as much as monetary obligation, thus impacting his credit score adversely. Due to this fact, he’s not eligible for an everyday bank card as of now. The one possibility for such an individual is to go for a secured credit score rating.
What are the important thing options of a secured bank card?
A. Safety deposit: A secured bank card carries a safety quantity which is equal to the credit score restrict of card.
B. Constructing a credit score rating: This card is usually used as a stepping stone for somebody with no credit score historical past to construct one by utilizing the bank card in a disciplined and honest method.
C. Like an everyday credit score rating: The secured credit card is sort of a common bank card. There is no such thing as a distinction in the best way a invoice cycle runs, funds are made and curiosity & penalties are levied.
D. Upgrading to an unsecured card: The utilization of a secured bank card in a disciplined vogue results in constructing of credit score historical past, thus serving to the consumer to grow to be eligible for an unsecured bank card at a later stage.
