Keeping the mandatory requirement of fixed deposit aside, secured credit cards work like a regular credit card. You will be assigned a credit limit (usually 70-90% of your fixed deposit amount and 90% in case of Step UP Credit Card). You can use the card to make purchases both online and offline and pay the bills as and when due. If you fail to make the full payment on time, finance charges will be applicable, just like regular credit cards.
Benefits of Secured Credit Cards
A secured credit card does not only help you build a better credit score but also offers the following benefits:-
- Interest on FD, which lets you earn and enjoy the benefits of a card at the same time.
- Rewards program, which allows you to earn reward points every time you use the card.
- Revolving Credit, allowing you to carry forward balances to the next billing cycle.
- Interest-Free Credit Period of about 30-50 days.
Also Know: How a secured credit card is different from an unsecured credit card?
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Secured Card by SBM Bank - Step UP Credit Card
SBM Bank (India) Ltd, with Paisabazaar as co-branded partner, offers Step UP Credit Card – a secured card provided against fixed deposit opened at the time of card application. This card can shield you from a bad credit score and improve your credit score. It is best suited for those who wish to own a credit card but are unable to qualify for the same.
Key Features of Step UP Credit Card
Here are the key features of Step UP Credit Card which make it a preferred option for those who want a credit card but do not qualify for it:
- Joining Fee:
- For FD of less than or equal to ₹5000: Rs. 250 + 18% GST
- For FD more than ₹5000: Nil
- Renewal/Annual Fee: Nil
- Interest on Fixed Deposit: A comparatively higher interest rate of 6.5% p.a. on your fixed deposit
- Instant Virtual Credit Card: You can start using your virtual credit card as soon as the payment for the fixed deposit is done by you
- Interest-Free Period: The interest-free grace period could range from 20 to 50 days
- Credit Limit: The credit limit for your Step UP card will be 90% of your fixed deposit amount (Fixed Deposit plan worth Rs. 60,000 will give a credit limit of Rs. 54,000)
- Digital Process: A hassle-free, completely digital process to get your secured credit card
- Rewards: Decent rewards provided on all your spending
- Easy Approval: The approval process is fast and easier because the bank is already risk-free by accepting a security deposit from the borrowers
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How to get Step UP Credit Card?
- Visit Step UP Credit Card page at Paisabazaar.com.
- Click on ‘Apply Now‘.
- Fill in the form on the redirected page with your KYC details.
- Complete your Digital KYC by uploading an Aadhaar document.
- Pay for the selected Fixed Deposit plan from your verified savings account.
- Access your Step UP virtual card immediately.
- Get your physical Step UP Credit Card delivered to your home.
You can start using your Step UP virtual card as soon as you complete your application. Application for Step UP Credit Card is completely digital and it doesn’t take more than 5 minutes.
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Who should get a Step UP Credit Card?
Step UP Credit Card is best suited for individuals with a low or poor credit history, which keeps them from qualifying for a regular credit card. People who wish to earn rewards on their spends and grow their money at the same time should consider investing in this credit card.
To improve/build your credit history with the help of a secured card, you should use it responsibly for several months or a couple of years.
FAQs
What is the difference between a Secured Credit Card and a Prepaid Credit Card?
Prepaid credit cards are similar to debit cards. You have to load a certain amount of money as per your spending capacity into your bank account and you can spend up to the limit amount with the prepaid card. These prepaid credit cards may be considered a good option as they do not require credit checks of any type. However, they cannot be used as a credit-building tool since they do not have any long-term benefits associated with them.
Why do I need a fixed deposit for a secured credit card?
You need a fixed deposit to get a secured credit card because this deposit acts as collateral or security against which the credit card is issued to you. As it is already explained that a secured credit card is best suited for those with no, low or poor credit scores, a fixed deposit covers the card provider in case of any irregularities in payment. Your fixed deposit account will be marked as a lien for a secured credit card. In case of payment defaults, the bank reserves the right to break your fixed deposit account and settle all outstanding dues on your credit card.
How much do I have to deposit to get a secured credit card?
A secured credit card is backed by a fixed deposit of as low as Rs. 2,000. For instance, Step UP Credit Card required a fixed deposit of Rs. 2,000 to provide the credit card.
Can a secured credit card build your credit score?
A secured credit card is meant for individuals who have a low or poor credit score. It can help you build/rebuild or improve your credit score. Given that payments are included in your credit report, making payments on time and maintaining a proper balance will help improve your credit score. And then, you may be eligible to apply for a regular credit card once your credit score is improved.
Can you be rejected for a secured credit card?
Getting rejected for a secured credit card is not so common since you are already paying a security deposit, in the form of a fixed deposit, to cover the card provider in case of any irregularities in payment. However, in some cases, the account is checked by the card provider. If you happen to have a bankruptcy on your record, a pattern of late payments, inadequate sales or other suspicious activities, your application may get rejected.
Will the fixed deposit cover my monthly credit card bills?
No, the monthly credit card expenses are not protected by the fixed deposit. All the credit card payments should be made in the same way as that of a regular credit card. If you skip your credit card payment for two consecutive payment periods, the bank retains the ability to reclaim all existing dues on your credit card from your fixed deposit account.
How fast do secured cards build credit score?
It would take about 30-45 days for this account to be recorded to the credit bureaus after you have opened your new credit card account. This is when you begin building up your credit score. It may take several months or even a couple of years for your credit score to improve properly.
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