July 15, 2025 · 12 mins read
Santhosh Kumar
In India’s credit scene, the terms 'secured' and 'unsecured' credit cards frequently appear. To begin with look, both see comparative — plastic in your wallet, swipe at the fund, or tap to pay. But the genuine distinction lies Below: whether you are required to deposit collateral or not. Understanding this refinement can shape your whole credit travel, from building your CIBIL score to Managing month-to-month installments and fees.
Whether you're a new graduate, a specialist, or somebody working on bettering your credit profile, knowing when to pick a secured card versus going straight for an unsecured one is vital.
A secured credit card is a choice where the bank requires you to pool in a settled deposit (FD) or cash collateral. That deposit backs your card's credit restrain and acts as a pad for the moneylender if you default.
In India, you regularly deposit any place from ₹5,000 to ₹50,000 with the bank. If you bank ₹25,000, your credit card limit regularly mirrors that amount.
The key perks:
1: Easier endorsement — no long credit history needed.
2: Helps construct or modify CIBIL score as you make customary payments.
The flip side:
1: Your cash remains Locked in the settled deposit until you near the card or the related FD.
2: Your credit restrain remains capped at the deposit amount.
3: Interest in the FD may be lower compared to other speculation options.
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An unsecured credit card requires no collateral or deposit. The bank amplifies the credit limit based on your income, job stability, and credit history.
That means:
1: If your CIBIL score is great (say, over 750) and your income is satisfactory, you can get approved.
2: Your credit limit may well surpass what you could’ve kept in a secured card.
The upside:
1: No blocked fund or FD included — cash remains in your account.
2: Potentially higher credit limits and additional advantages like compensated focuses, cashback, and relaxed access.
The downside:
1: Approval is harder if you’re unused to credit or have a destitute credit score.
2: High Interest rates and overwhelming punishments if you miss installments — no security cushion.
3: You may confront yearly fees or covered-up charges if you do not keep up with certain spending.
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Feature: Collateral Requirement Secured Credit Card: Cash deposit / FD (e.g., ₹10,000 deposit yields, ₹10,000 limit) Unsecured Credit Card: None
Feature: Eligibility Criteria Secured Credit Card: Minimal — dependent on deposit Unsecured Credit Card: Higher — needs great credit score, steady income.
Feature: Credit Limit Secured Credit Card: Limited to the deposit amount Unsecured Credit Card: Determined by bank based on creditworthiness
Feature: Risk to Issuer Secured Credit Card: The low deposit acts as a security. Unsecured Credit Card: High — depends exclusively on the borrower's capacity to repay
Feature: Fees & Charges Secured Credit Card: It may come with a Low yearly fee. Unsecured Credit Card: Varies — charge waivers conceivable if yearly spending is high
Feature: Interest Rate Secured Credit Card: Comparable APR, but less hazardous for banks Unsecured Credit Card: Often higher, particularly if the credit score is low
Feature: Approval Turnaround Secured Credit Card: Faster — faster documentation Unsecured Credit Card: Slower — confirmation of CIBIL, Income, documents
Feature: Ideal User Secured Credit Card: First-time card clients, Low CIBIL score clients, risk-averse Unsecured Credit Card: Experienced credit clients, great CIBIL score, higher income
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Pros:
1: Easier approval.
2: Helps build/rebuild credit.
3: Lower hazard of rejection.
Cons:
1: Your cash remains locked.
2: Limited credit.
3: Fewer advantages than top-tier unsecured cards.
Pros:
1: Higher credit limit.
2: Rich rewards, rebates, and lounges.
3: No blocked funds.
Cons:
1: Harder to qualify.
2: Penalty-heavy if installments are delayed.
3: Possible yearly charges unless utilization is high.
If you've never had a credit card or advance recently, you're considered an "unused to credit" candidate (regularly checked as "NA" or "NH" in CIBIL reports). Banks don't have a history to review your credit behavior, so they delay offering you an unsecured card.
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1: Open a settled deposit of ₹10,000–₹25,000 with your bank.
2: Apply for a credit card against that FD — it’ll have a coordinating limit.
3: Use the card sparingly and reimburse the full levy on time.
4: Within 6–12 months, you'll construct a strong CIBIL score of 700 or higher.
5: Once your profile develops, you can move on to premium unsecured cards.
Why this works: You dispose of the chance for the moneylender. They have your deposit as a security net. It’s too secure a way for you to learn how credit works without gambling major debt.
Maybe you’ve defaulted in the past, missed installments, or maxed out cards — all of which drag your score down. If your score is Below 650, your chance of getting an unsecured credit card is exceptionally low.
1: Use your secured card capably — never miss the due date.
2: Keep credit usage beneath 30% (i.e., don’t spend over ₹3,000 on a ₹10,000 limit).
3: Pay in full each month to maintain a strategic distance from Interest charges.
4: Monitor your CIBIL report month to month to track progress.
Why this works: A secured card is regularly the way to demonstrate you've changed your reimbursement behavior. It gives you a moment's chance. Most clients see their score climb 50–100 focuses within 6–12 months with restrained use.
If you, as of now, have a sound credit score and steady pay, you're in a sweet spot for getting a not too bad unsecured credit card.
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1: Apply for entry-level or mid-tier unsecured cards (like HDFC MoneyBack+, SBI SimplySAVE, Axis Ace).
2: Prioritise cards that offer cash-back quickened rewards or co-branded advantages (e.g., Amazon Pay, Flipkart Axis).
3: Always check if there's a joining charge and if it's waived or postponed based on investment thresholds.
Why this works: You don't need to bolt your reserves in an FD. Banks believe your reimbursement capacity is due to your financial history. This opens the entryway to cards that compensate you for normal investing — fuel, basic supplies, OTT memberships, etc.
Maybe you are inclined toward liquidity or don't need your cash sitting still in an FD. You're looking for a card that works straight out of the box — without any deposit.
1: Apply as it were if your CIBIL score is 700+ and pay is verifiable.
2: If you're a salaried person, see for pre-approved offers through net managing an account or credit score platforms.
3: Use credit dependably: don't spend over 50% of your limit, and continuously pay on time.
Caution: It’s simpler to overspend with no FD backing you up. Late installments or defaults straightforwardly influence your credit score, and there’s no deposit to mollify the blow for banks.
Why this works: If you're certain about Managing bills, unsecured cards allow you more adaptability and quick get to credit — no holding up for FD setup or blocking of funds.
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These advantages aren't accessible on most essential or secured cards. They're saved for high-end, unsecured credit cards issued to premium customers.
Cards like HDFC Infinia, SBI Card Elite, Axis Magnus, and ICICI Emeralde are known for:
1: Complimentary air terminal relaxes (household & international).
2: Golf course access.
3: Concierge administrations for travel, eating, and gifting.
4: 24/7 client helpline and speedier grievance redressal.
These cards frequently require:
1: High income (₹12–30 LPA+).
2: Excellent credit score (750+).
3: Sometimes, an existing keeping money relationship or invitation.
Why this works: Luxury comes at a cost. These cards have higher yearly fees (₹3,000–₹12,000), but if you travel frequently or feast out regularly, the rewards and administrations counterbalance the cost.
Secured cards won’t offer these advantages — no matter how tall your FD is. They’re basically for essential utilization and credit building.
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1: Indian inhabitant, age 18–70.
2: Valid ID verification, address confirmation, PAN.
3: Bank collateral: FD or reserve funds as a deposit.
4: Minimal pay verification; a few suppliers acknowledge zero Income (particularly students).
1: Indian inhabitant, age 21–65 (shifts by bank).
2: A high CIBIL score (typically 700+).
3: Income verification: compensation slips, ITR, bank statement.
4: KYC reports conceivably work subtle elements and current bank relationships.
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1: Secured: If deposit ₹20,000, limit = ₹20,000.
2: Unsecured: With ₹10 LPA compensation and great CIBIL, you may get ₹1.5–3 L limit.
Fees, Charges & Interest
Annual Fee:
1: Secured: little or waived.
2: Unsecured: ₹499–₹3,999+, waivable with spend criteria.
APR (Annual Percentage Rate):
1: Secured: 24–36% p.a.
2: Unsecured: 20–36% p.a. (lower for top-tier pre-approved ones).
Other Charges:
1: Late installment fees: ₹500–₹1,000.
2: Forex markup: 2–3%.
3: Cash development charges: 2–3% or ₹300.
1: Example: If your card limit is ₹10,000, Avoid investing more than ₹3,000 in a charging cycle.
2: Low usage demonstrates that you're not over-reliant on credit — a key factor in improving your CIBIL score.
1: Don't settle for fair, the least due — pay the whole extraordinary sum sometime recently the due date.
2: Missed or postponed installments can extremely harm your credit score (up to 50+ points).
Read More:: Is Credit Score and CIBIL Score the Same?
1: Make little, sensible buys each month — fuel, basic supplies, online memberships, etc.
2: This makes a dynamic reimbursement track record that moneylenders can assess.
1: Track advance on stages like CIBIL, Experian, or CRIF.
2: You should begin seeing enhancements within 3–6 months if utilization and installments are consistent.
1: Once your score crosses 700, ask your bank for an unsecured card upgrade.
2: Alternatively, apply for an unused unsecured card with another backer utilizing your upgraded credit profile.
1: Once your secured card is changed over or closed, the bank discharges your settled deposit.
2: You moreover get Interest earned amid the lock-in period — ordinarily 3–6% annually.
Over time, this strategy builds a solid credit history, superior credit qualification, and gets to premium credit products.
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1: Stay steady: opportune installments, Low utilisation.
2: Between months 6–18, banks may offer conversion.
3: You deposit additional FD or exit deposit — change into a customary card with no collateral.
4: Your credit score should be 700+ to qualify easily.
1: Need credit ASAP? → Secured.
2: Already credit-savvy with a score >700? → Unsecured.
3: Want collateral-free, worldwide advantages? → Unsecured.
4: First card ever → Secured to begin building.
5: Want to maintain a strategic distance from FD locking cash? → But you’ll pay in fees for unsecured.
1: SBI Card Unnati Secured: ₹3,000 FD, ₹3,000 credit limit, no yearly fee.
2: Axis Bank Insta Simple: Compensation or secured card.
3: ICICI Instant Platinum: Needs credit appraisal, not entirely secured.
4: HDFC MoneyBack+: Unsecured, great for cashback.
1: Track your credit utilisation.
2: Pay the full explanation to maintain a strategic distance from interest.
3: Check CIBIL reports annually.
4: Don’t apply for as many cards at once — each application plunges your score.
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No. You’ll require a credit impression. A secured card is the ideal beginning point.
Yes. The interest you win on the FD is included in your assessable income.
No. FD is collateral. Credit use is calculated based on your card limit vs usage.
Yes — banks frequently permit transformation after 6–18 months if you’ve demonstrated your creditworthiness.
Completely — furthermore, the Interest earned on the FD.
No. The FD remains blocked until you near or change over the card.
Secured may fetch more due to Locked funds and restricted rewards. Unsecured, if utilized mindfully, can be more fulfilling and cost-effective.
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