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What is a Secure Credit Card?


What is a Secure Credit Card?

A secured credit card is a type of credit card issued by a bank or financial institution that requires a deposit (FD, DPS, other savings schemes) from the cardholder as collateral. This deposit functions as a security deposit. If the card member fails to consistently pay the card bill or defaults, the bank can recoup the outstanding balance by forfeiting this deposit.

In contrast to FD, DPS, or other savings schemes, if someone obtains a credit card, they become subject to the terms of that scheme, and the funds held under that scheme cannot be withdrawn during the card's usage period. Once the respective bank or financial institution appropriately surrenders the card associated with the scheme, you may then choose to utilize the scheme for your needs. Even if you have availed of any scheme, the opportunity to earn interest/profit usually remains active.

In our country, banks typically provide credit limits ranging from 80% to 90% in the case of issuing credit cards opposite to FD, DPS, or other savings schemes.

It's worth mentioning that not all credit cards are secured credit cards. Only those who are deemed ineligible based on the criteria and qualifications for credit card issuance by financial institutions or who are not dissatisfied with the obtained limit primarily tend to use secured credit cards.