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    What is a secured credit card and how does it work?

    Updated · CardKhoj Editorial Team

    Short answer

    A secured credit card is issued against a fixed deposit you open with the bank. The credit limit is usually 75–90% of the FD amount, and the FD keeps earning interest. Because the bank holds the deposit as security, approval does not depend on income or credit score — making it the easiest way to build credit from zero.

    How it works step by step

    1. Open a fixed deposit (often from ₹2,000–₹10,000) with the issuing bank.
    2. The bank marks a lien on the FD and issues a credit card with a limit of 75–90% of the deposit.
    3. You use and repay it like any credit card. Your payments are reported to CIBIL and other bureaus.
    4. If you default, the bank can recover dues from the FD. If you pay well, the FD stays yours and keeps earning interest.

    Who should get one

    • Students and first-time users with no credit history.
    • Freelancers, homemakers and others without income documents.
    • People rebuilding a damaged credit score after defaults.

    Tips

    Keep usage below 30% of the limit and pay in full every month. After 6–12 months of clean history you will usually qualify for a regular unsecured card — and you can then close the secured card or keep it as a lifetime free backup.

    This answer is general information, not personalised financial or tax advice. Rules, rates and limits change — confirm with your bank, the RBI or a qualified adviser before making decisions.