Credit card is also known as Plastic money. Credit card extends credit facility to an individual as we can buy goods, pay our utility bills and book our tickets online as well. Secured card is a card for which we need to have cash deposit in our bank account as collateral. This is the basic difference between a normal credit card and a secured credit card. A secured credit card has a credit limit that's usually from 50% to 100% of the security deposit you make. Secured credit cards usually have fees that regular credit cards do not. This includes application fees, processing fees, and annual fees. One should avoid high cost cards as they can greatly reduce your deposit and eventually your credit limit. Credit card application can be made by people having good credit history as well just to avoid felling in debt trap. Every bank credit card is not secured but there are some special cards which are secured. Below are the advantages of a secured credit card:
" Building your credit history: An individual who has a bad credit history or no credit history are generally not provided any credit line or credit cards. But secured card can be issued to these people which in turn can help you building your credit history. People with bad credit history can actually improve their credit score and their credit worthiness by paying timely payments after using secured credit card. Timely payments gradually increase your credit score and thus helping you borrowing credit at the time of requirement.
" Earning interest: Some secured credit cards place your deposit into an interest-bearing savings account. Depending on the interest rate, you might be able to earn valuable piece of money as well.
" Lesser risks for banks: Paying the security deposit gives the card issuer incentive to accept your application. As money is deposited as collateral, reduces non performing risk for the credit card issuer.
" Conversion to traditional credit card: Some secured credit cards automatically convert to traditional credit cards within a certain time frame (sometimes 18-24 months), provided you make all payments on time and don"t go over your credit limit.
" Reduced risks of debt collectors: Your security deposit is used if you default on your payment. Unless you spend over your deposit, you won't get sent to collections for defaulting on your payments.
Secured bank credit card is very easy to apply as banks generally follow low approval process. Top credit cards India includes few of the secured credit cards as well. Credit card application can be submitted via insurance aggregators like policybazaar.com these days as it is a convenient mode offering comparison facility.