Did you know over 190 million adults in India are unbanked – do not have a bank account? India currently stands at the second position in terms of unbanked population in the country. Being unbanked can strip you off from many financial benefits provided by the governments and the banking institutions. Such as securing a simple credit card can be a hassle if you don’t have a bank account.
Although difficult, it is still not impossible to get a credit card without a bank account. While most people with bank accounts easily get unsecured credit cards, very less people are aware about the features of a secured credit card, made for people with zero or poor credit history.
Instead of confusing you with more banking terms, let’s try to understand what is a secured card and how it can help you to get credit without a bank account?
So, let’s get started.
Can I get credit card without bank account?
There’s no fixed answer. It depends on bank to bank. Some banks may offer unsecured credit cards without a bank account.
On the other hand, if you want a secured credit card without a bank account, it can be possible. The only time you will be asked for a bank account is when you are transferring the security deposit to the bank. You can easily make this payment in cash too. A lot of banks offer this facility.
Let’s understand what a secured credit card is.
What is a secured credit card?
A secured credit card, as the name suggests, basically helps issuers feel secure about lending or giving you a certain amount of credit. They secure the amount given as due by taking a collateral.
Usually, people with bad or no credit history go for secured card to build their credit score. But, in this case, people with no bank accounts can also get a secured bank account. So, let’s understand how it works.
How secured credit cards work?
Banks provide secured cards only when a given amount is paid to the bank as the security deposit or collateral. This deposit becomes your credit limit. You won’t be able to spend more than the deposit amount.
If you fail to repay your end of the month bill, the amount will be recovered by the bank from your deposit. The card is only issued by the bank to help you build your credit score.
Here are a few features of the secured credit cards.
- The approval for a secured credit card is instant as the banks don’t have any risk involved owing to the deposit given by the individual as a collateral.
- A few banks offer interest on the security deposit. This helps individuals to earn some interest along with building credit score.
- The applicants don’t need to provide additional inquires for their payment and credit history.
- Users may get a grace period to pay off their bill in case of any delay.
How to apply for a secured credit card?
The process is as simple as applying for an unsecured credit card. Banks just check your credit score and don’t dig too deep into understanding your payment history and pattern.
Here are a few factors to keep in mind before applying for a secured credit card:
Start with small credit limit. Do not deposit a very huge sum of amount to the bank. Start small and be regular in your payments. If you deposit a huge sum, you might miss a payment due date. This will affect your credit score. If you do spend the amount properly and pay back on time, banks can also allocate certain amount of money to your credit card without any deposit.
Eligibility for a secured card
Every bank has its own set of eligibility criteria. While some banks are okay with making a minimum deposit for the card, others might ask you to open a Fixed Deposit in the bank. The FD serves as a collateral for the bank against your credit card.
In case you are not able to pay your dues, the amount is recovered from the FD.
Many banks offer additional benefits on secured cards. Therefore, conduct a thorough research, and select a bank to apply for a secured credit card. These benefits may include:
- Ability to withdraw 100% of credit limit
- Discount on dining
- Offers on Fuel
- Gift vouchers
- Extra reward points
- Complimentary Airport lounge stay
We hope now you know if you can get a credit card without a bank account or not. Hope this article helped you to understand more about secured credit cards.