What is a Credit Card? Secured vs Unsecured Credit Cards Explained
A credit card is a payment card that allows you to borrow funds from a bank or financial institution up to a set limit. Unlike debit cards, the money isn’t deducted from your account immediately. Instead, you’re billed at the end of the billing cycle, and you must pay back the amount either in full or in part.
Credit cards are ideal for building credit scores, earning rewards, managing expenses, and handling emergencies. However, misuse can lead to debt.
Types of Credit Cards in India
There are two major types of credit cards you should know:
- Secured Credit Cards
- Unsecured Credit Cards
What is a Secured Credit Card?
A secured credit card is issued against a fixed deposit or security amount. Your credit limit is usually 75-85% of the deposit. These are great for people with poor or no credit history.
Who Should Use It?
- Students and beginners
- Low or no credit score individuals
- Those looking to rebuild their credit
What is an Unsecured Credit Card?
An unsecured credit card doesn’t require any deposit or collateral. It’s the most common type and is issued based on your income, credit history, and credit score.
Who Should Use It?
- Working professionals
- People with established credit history
- Frequent online shoppers
Key Differences: Secured vs Unsecured Credit Cards
| Feature | Secured Credit Card | Unsecured Credit Card |
|---|---|---|
| Collateral | Required (Fixed Deposit) | Not Required |
| Approval | Easy, even with low score | Needs good credit |
| Credit Limit | Based on FD amount | Based on profile |
| Best For | Beginners, low credit score | Experienced users |
Tips to Use Credit Cards Safely
- Always pay your bills on time
- Don’t exceed 30-40% of your credit limit
- Check your statements for fraud
- Avoid withdrawing cash unless necessary
- Use auto-pay to avoid missed payments
Conclusion
Understanding the difference between secured and unsecured credit cards can help you make smart financial decisions. Whether you’re building your credit from scratch or looking for advanced features, there’s a card suited for you. Use your credit card wisely to improve your financial health over time.
Have questions about credit cards or want to explore top options in India for 2025? Stay tuned to TechyKushal.com for expert guides!
