Most of the banks check the salary and the Cibil Score of an individual before issuing a credit card. They want a Cibil Score of at least 750 and above in order to give quick approval to the applicant. But if in case you have a poor Cibil Score then too you can apply for a credit card. Those credit cards are issues against your fixed deposit with the bank and they are known as secured credit cards. So, it is necessary for you to spot the major differences between Secured Credit Card vs Unsecured Credit Card. Usually, the bank issues an unsecured credit card if you fulfil the salary and Cibil Score Criteria.
Comparison of Secured Credit Card and Unsecured Credit Card
Here are some of the major differences between a secured and unsecured credit card. You must go through all the major comparisons between them and try to understand the uniqueness of each of them.
| Basis of Difference | Secured Credit Cards | Unsecured Credit Cards |
|---|---|---|
| Meaning | Secured Credit Cards are usually issued against Collateral Security and it can be a fixed deposit that you have kept with the bank. | Unsecured Credit Cards are issued without any collateral security on the basis of your monthly income and the Cibil Score. |
| Income | A stable income is not necessary to apply for a secured credit card. | The bank will only issue you an unsecured card if you have a stable monthly or yearly income. |
| CIBIL Score | You can apply for this card at a low Cibil Score and you can improve it after using the credit card. | A minimum Cibil Score of 750 and above is required to apply for these types of cards. |
| Collateral | These credit cards will always need collateral and they can only be applied if you have an FD with the bank. | There is no need for any collateral to apply for these types of credit cards. |
| Credit Limit | Most of the banks give a credit limit of 75% to 85% of the Fixed Deposit in these types of credit cards. If you are having a high amount of fixed deposit with the bank then your credit limit will also be high. | Your monthly salary and your credit history is the determining factor for the credit limit in these cards. If you have a good Cibil Score and a handsome salary then your credit limit will be high. |
| Documentation | Secured Credit Cards usually have a quick approval from the bank and need less paperwork. | The document process of the unsecured credit cards is longer than the process of the secured credit cards. |
| Revive your Credit History | If you have a bad Cibil Score then you can improve it with the help of Secured Credit Cards. | The bank will not issue you a credit card if you are having a bad Cibil Score. |
| Interest on FDs | The Secured Credit Cards gives you a dual benefit in which you can make the use of your credit cards and their offers and on the other hand the interest gets added to your fixed deposit. | In the unsecured credit cards, you can only enjoy the offers and deals on it and not any extra interest. |
| Fees | The fees of the Secured Credit Cards are low and it can be zero depending upon the bank. | Unsecured credit cards usually have a certain fee but you can waive off the fees by achieving the milestones defined by the banks. |
| Needs FD | A secured credit card always needs a fixed deposit on the basis of which you apply for a credit card. | There is no need for any FD because your salary and Cibil Score is enough to apply for the credit card. |
| Suitability | This credit card is suitable for those individuals who are having a bad Cibil Score and a low or unstable income. | This credit card is suitable for those individuals who have a good monthly salary and a good credit history. |
| Improves Credit History | Secured Credit Cards are useful in improving a bad credit history so that you can apply for unsecured credit cards. | If your application is accepted by the bank then it means that you have a good credit history. |
Conclusion
Now you know all the major differences between Secured Credit Card vs Unsecured Credit Card. So must choose any credit card as per your requirement. If you have an FD with the bank then you can choose the secured credit cards because their approvals are quick. On the other hand, a stable and high salary and a good Cibil Score will also give a quick approval for the unsecured credit cars. The ball is in your court so take your call according to your requirement.
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