Short answer: A secured credit card is issued against a fixed deposit you pledge as collateral. Your credit limit is typically 80 to 90 percent of the FD value, approval is near-guaranteed with no income proof or credit score needed, and your FD keeps earning interest. It is one of the best ways to build or rebuild your credit score, ideal for students, first-time earners, the self-employed, or anyone with a low or no credit history.
Cannot get a regular credit card, or want a safe way to build credit? A secured card is the answer. Here is how it works.
What is a secured credit card?
A secured credit card is a card backed by a fixed deposit that you open with the bank as collateral. The bank holds your FD as security and issues you a card against it, so its risk is low, which is why approval is so easy.
It works exactly like a regular credit card, you can shop, pay bills, and transact online, but your credit limit is tied to your deposit. And crucially, your FD keeps earning interest the whole time it secures the card.
How does it work?
- You open (or pledge) a fixed deposit, which acts as the security.
- The bank issues a card with a credit limit typically 80 to 90 percent of the FD value (some go up to 100 percent). So a 50,000 FD might get you a limit of around 40,000 to 45,000.
- You use and repay the card like any credit card, and your on-time payments are reported to credit bureaus, building your score.
- Your FD stays locked while you hold the card, and you cannot withdraw it without closing the card. It continues earning interest throughout.
- If you default, the bank can recover the dues from your FD.
Want a higher limit later? Simply increase your deposit.
Why get a secured card? The benefits
- Near-guaranteed approval. Because your FD is collateral, no income proof or prior credit history is needed. Approval is simple and fast.
- Builds or rebuilds your credit score. Usage and payments are reported to bureaus just like a regular card, so responsible use steadily builds your history.
- Your FD keeps earning. You do not lose out on your deposit’s interest while it secures the card, a genuine double benefit.
- Lower finance charges. Interest rates on secured cards are often lower than on unsecured cards.
- Controlled spending. Your limit is tied to your deposit, which naturally curbs overspending.
- Often on RuPay. Many secured cards run on RuPay, so you can also link them to UPI.
Who should get a secured credit card?
It is ideal for:
- First-time earners and students with no credit history, as a safe first card.
- The self-employed or homemakers who may lack formal income proof.
- Anyone rebuilding a low credit score after past defaults.
- Those who want controlled spending, since the limit is capped by the deposit.
How to use it to build credit
The card is the tool; your habits build the score. Do these:
- Pay the full amount due, every month. On-time payment is the biggest score factor.
- Keep utilisation low, ideally below 30 percent of your limit.
- Use it regularly for small, planned spends, and pay in full.
- Activate it promptly after issuance, as some cards auto-close if not activated in time.
With clean usage over roughly 12 to 18 months, you can build a healthy score, enough to qualify for a regular unsecured card. At that point, the secured card has done its job, and you can upgrade and unlock your FD.
Frequently asked questions
What is a secured credit card?
It is a credit card issued against a fixed deposit you pledge as collateral. Your limit is typically 80 to 90 percent of the FD value, and it is used to build or rebuild credit with near-guaranteed approval.
Does a secured credit card help build my credit score?
Yes. Your usage and on-time payments are reported to credit bureaus just like a regular card, so responsible use steadily builds your credit history and score.
Does my FD still earn interest with a secured card?
Yes. Your fixed deposit stays intact and keeps earning interest while it secures the card, which is a key advantage over other options.
Do I need income proof or a credit score for a secured card?
Usually not. Because your FD is collateral, approval typically requires no income proof or prior credit history, making it accessible to almost anyone with a deposit.
Can I withdraw my FD while using the card?
No. The FD stays locked as security while the card is active. To free it, you close or settle the card first, often after upgrading to an unsecured card.
With Jupiter: build your credit history and see every spend clearly with a lifetime-free Edge+ RuPay Credit Card. Related reading: what is a credit score and how to improve your credit score.
Build credit the smart way
A secured card is a safe, effective way to start or rebuild your credit journey. Once your score is established, a lifetime-free everyday card like the Jupiter Edge+ RuPay Credit Card lets you keep building credit through UPI while earning cashback. Jupiter is the 1-app for everything money.
Secured card features, limits, and eligibility vary by issuer and are subject to change. Refer to the Jupiter app for current terms. This article is general information, not financial advice.
