Secured Credit Cards: 5 Reasons Low Income Earners Should Apply

Secured Credit Card for Poor Earners

Secured credit cards are a type of credit card that are designed for individuals with limited credit history or low income and are looking to build or improve their credit history. They are called “secured” because they require a security deposit, which acts as collateral in case the cardholder is unable to make payments.

Why Poor Earners Should Apply for Secured Cards?

Some of the benefits of secured credit cards for low-income earners include:

  1. Building credit history: Using a secured credit card responsibly can help build a good credit history, which can make it easier to qualify for loans and other types of credit in the future. Remember that your financial transaction report using this card is reported to the credit bureaus. So making timely payments and keeping balance low or zero, can help achieve the main objective i.e. build or improve credit history.
  2. Low credit limit: The credit limit on a secured credit card is usually lower than that of a card provided to high income earners or traditional cards. This is a good feature as it limits overspending and make the repayments manageable for low-income earners. Note that, the credit limit is depends on the amount of the security deposit.
  3. Low or no annual fee: Many secured credit cards have no annual fee, or a very low annual fee, which can make them more affordable for low-income earners.
  4. Low or no interest rate: Some secured credit cards have no interest rate, while others have very low interest rates. But there are cards that may have higher interest rates than traditional credit cards.
  5. Security deposit: These cards require a security deposit, which is typically equal to the credit limit. The deposit is held by the card issuer and is refundable when the cardholder closes the account in good standing.

It’s important for low-income earners to be aware of the terms and conditions of the secured credit card they are considering and make sure that they understand the fees, interest rate, and credit limit before applying. They should also make sure that they are able to make the payments on time and not miss the due date, as that would affect their credit score negatively.


Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].

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