Secured vs. Unsecured Instant Approval Credit Cards: Which Is Right for You?

One way to decide between instant secured and unsecured cards is to understand what they offer and how they differ. Here is a quick overview.

Finance Jun 14, 2024 4 Add to Reading List

Secured vs. Unsecured Instant Approval Credit Cards: Which Is Right for You?

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In the digital era, you can effortlessly apply for a credit card with instant approval from the comfort of your home. Choosing one that fits your needs best can be confusing with the many excellent options available at your fingertips, including secured and unsecured cards.

One way to decide between instant secured and unsecured cards is to understand what they offer and how they differ. Here is a quick overview.

What is an Unsecured Credit Card?

The majority of cards offered fall under this category as they don’t require you to give any asset as collateral. Issuers give you an instant credit card based on your creditworthiness and repayment capacity. The credit limit depends on these factors, so good financial health is important for enjoying maximum unsecured credit card benefits.

What is a Secured Credit Card?

You can apply for these cards even with a low credit score or no credit history. These cards are designed to help you boost your creditworthiness and eligibility with timely bill payments. This is why opting for a secured card is ideal if you can't apply for an unsecured one.

Issuers offer these cards against a collateral, generally a fixed deposit. Most give up to 85% of your deposit amount as your credit limit, but you can also get a 100% credit limit with select issuers.

While you use your card, your deposit continues to earn interest at the fixed rate the issuer offers. This way, you get a chance to access credit, build creditworthiness, and enjoy assured returns.

Differences Between Secured and Unsecured Cards

Consider these distinguishing factors for choosing the right type of card:

Parameters	Secured Credit Cards	Unsecured Credit Cards
Credit Limit	Secured gives you more control over the limit as it depends on the deposit amount	Depends entirely on the issuer but is generally higher compared to a secured card
Collateral	You need to provide an asset as collateral, and most issuers accept an FD of 6 months or more	You don’t have to offer any collateral, and the card is offered based on your credit profile
Interest Rate	It has a lower interest rate, as the issuer can compensate for the financial loss from the deposit amount. The deposit also earns fixed interest for the predetermined tenor.	Since there is a higher risk for the issuer in giving you credit, the interest rates are higher to make up for it
Charges	Comparatively lower than unsecured instant credit card	Can be higher than secured cards
Eligibility Criteria	It is simple as generally anyone over the age of 18 offering the required collateral can apply with minimum documentation	It is stringent and varies across issuers, with most requiring a good credit score
Benefits and Rewards	You may not get as extensive perks as offered in unsecured cards	You can enjoy rewards, cashback, discounts and many other perks
Consequences of Non-Payment	The issuer can liquidate your asset to recover the outstanding balance, so you can lose your deposit if you fail to pay the bill on time	The issuer will levy interest on the outstanding balance, which will be compounding and can lead to high debt

Tips for Choosing the Right Option

If you are still confused about which card to choose, consider the following and apply for a credit card with instant approval:

Creditworthiness

If you have a high score, you can easily get an unsecured credit card. In case your score does not meet the set criterion or if you don’t have one, get a secured card. You can use it and repay the bill on time to build or rebuild your creditworthiness. Once done, you can get an unsecured card or any other credit as per your eligibility.

Finances

Unsecured cards do not require any security or collateral. So, if you don’t want to pledge your assets, choose this card. If you have the financial capacity to put up a deposit for the decided tenor, you can get a secured card.

In case you don’t qualify for unsecured cards and cannot offer an FD, choose another option for building your credit score. This can include joint credit and credit-builder loans, among other options.

Goals

If your primary objective is to boost your credit score and your eligibility for other credit, go for secured cards. For rewards, discounts, offers, and more, on every credit card transaction choose unsecured cards.

In conclusion, you need to first analyse your financial requirements and check your eligibility to choose the right instant credit card. With One Credit Card, you can get a secured as well as unsecured option according to credit needs.

You can enjoy up to 5X reward points on your top two spending categories, with easy no-cost EMI options. Other benefits include easy-to-meet eligibility criteria, quick onboarding, exciting offers and cashback, and no joining and annual fees.

You can also easily monitor your card on the One Credit Card app and stay in control of your finances. Apply for this credit card with instant approval to make payments convenient and rewarding.