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Secured vs Unsecured Credit Card: What's the Difference and Which One Should You Get?

Key Takeaways

A secured credit card is backed by a fixed deposit. Your FD acts as collateral and your card limit equals your FD value.
An unsecured credit card requires no deposit. Approval is based on your CIBIL score, income, and credit history.
Both card types build your CIBIL score the same way, through on-time payments and responsible usage.
If you have no credit history or a low CIBIL score, a secured card is the smarter, faster way to start.
IDFC FIRST Bank's FD-backed credit cards offer guaranteed approval, and your fixed deposit continues to earn interest while your card is active.

29 Apr 2026 by Team FinFIRST

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If you have ever wondered whether you need a good CIBIL score to get a credit card, the answer is: not always.

A secured credit card (also known as FD-backed credit card or FD credit card) lets you get a card by placing a fixed deposit as security. No CIBIL score needed. No income proof hassle. Guaranteed approval.

An unsecured credit card works the other way. The bank extends you a credit limit based on how creditworthy you already are. Better score, better limit, better benefits.

Neither type is better than the other in isolation. The right one depends entirely on where you are in your credit journey right now.

How to Save on Flights Using IndiGo IDFC FIRST Dual Credit Card

How to choose between an unsecured and fixed deposit-backed credit card

What is a Secured Credit Card?

A secured credit card is a credit card backed by collateral. In India, that collateral is almost always a fixed deposit.

Here is how it works: you place a fixed deposit with the bank. The bank issues you a credit card with a minimum limit equal to your FD value. You use the card for purchases, pay your monthly bill, and your FD continues to earn interest in the background. The bank holds the FD as security in case you default. If you pay consistently, which is the whole point, your FD stays untouched.

The reason secured cards exist is simple. Banks take on risks every time they issue a credit card. With a secured card, that risk is covered by your deposit. This makes it much easier to get approved, even if you have no credit history, a low CIBIL score, or an income profile that would not qualify for a regular card.

Who typically goes for a secured card:

Students who are new to credit and have no credit history yet

Homemakers without a formal income source

First-time jobbers who have just started working

Self-employed individuals with irregular income

People rebuilding their credit score

People who have been rejected for unsecured cards

One thing worth knowing: with IDFC FIRST Bank's FD-backed credit cards, your credit limit is 100% of your FD value, and your FD continues to earn interest through the card's tenure. So, you are not losing anything by placing the deposit. You are essentially putting idle savings to work while building a credit track record at the same time.

What is an Unsecured Credit Card?

An unsecured credit card does not require any deposit or collateral. The bank approves you based on your credit profile, primarily your CIBIL score, income, and existing credit history.

When you apply, the bank checks your repayment track record, how much credit you already have, your income stability, and your debt-to-income ratio. If your profile meets their criteria, you get approved with a limit based on your capacity. Your credit limit is set based on what the bank thinks you can responsibly handle.

Because there is no collateral backing the card, banks take on more risk with unsecured cards. That is why they are selective about who they approve.

Who typically qualifies for an unsecured card:

Salaried individuals with a stable income

A CIBIL score of 750 or above

People with an existing credit history: a loan, a previous card, or both

Individuals who have a good credit repayment behaviour

Unsecured cards also tend to come with a wider range of features: higher reward rates, travel benefits, lounge access, co-brand partnerships, and more. This is because the bank is competing for customers who already have options.

That said, a higher credit limit and more features also mean more room to overspend. Unsecured cards reward discipline. They can also amplify mistakes if you are not careful with utilisation and payments.

Secured vs Unsecured Credit Card: Key Differences

Feature	Secured Credit Card	Unsecured Credit Card
Collateral required	Yes, fixed deposit	No
CIBIL score needed	Not mandatory	Usually, 750 or above
Approval odds	Guaranteed (FD-backed)	Depends on profile
Credit limit	Equal to FD value	Based on income and credit score
FD interest	Continues to earn	Not applicable
Best for	New-to-credit, low CIBIL, irregular income	Established credit users

Can a Secured Credit Card Help You Build or Improve Your CIBIL Score?

Yes, and this surprises a lot of people.

Secured and unsecured credit cards build credit the exact same way. When you use your card and pay the bill on time, that payment history gets reported to the credit bureaus. The bureaus do not distinguish between a secured card and an unsecured card. They look at whether you paid on time, how much of your available credit you used, and how long your account has been open.

This means a secured card, used responsibly, will improve your CIBIL score just as effectively as any other card.

Payment history is the biggest factor in your CIBIL score. Pay your full bill before the due date, every month. Even one missed payment can set you back significantly.

Credit utilisation is the second major factor. Try to keep your usage below 30% of your card limit. If your limit is ₹20,000, aim to keep your monthly spend under ₹6,000. Lower utilisation signals that you are not dependent on credit.

Most people who start with an FD-backed credit card and use it consistently for 12 to 18 months see a meaningful improvement in their CIBIL score. At that point, they become eligible for unsecured cards with better features and higher limits. The secured card is not a dead end. It is the first step on the path.

Secured or Unsecured Credit Card: Which One is Right for You?

This comes down to one honest question: where does your credit profile stand right now?

Go with a secured credit card if you:

Have no credit history and are applying for your first card

Have a low CIBIL score (typically below 700)

Are a student, homemaker, or self-employed without a regular salary

Have been rejected for an unsecured card before

Want guaranteed approval without the stress of eligibility checks

Consider an unsecured credit card if you:

Have a CIBIL score of 750 or above

Have a stable salary

Have been using credit responsibly for at least a year or two

Want access to premium benefits like travel rewards, lounge access, or co-brand perks

If you are somewhere in the middle, a decent score but not great, or a new job with limited credit history, starting with a secured card is still the better move. You build your score on solid footing, keep your FD earning interest, and position yourself for a better unsecured card in a year or so.

IDFC FIRST Bank Secured Credit Cards: Options Worth Knowing

IDFC FIRST Bank offers four FD-backed credit cards, each designed for a different need and budget. All of them come with guaranteed approval, a credit limit equal to 100% of your FD, instant limit enhancement when you top up your FD, and the FD continues to earn interest through the tenure.

FIRST WOW!

Your go-to card if you shop on international websites or travel abroad

Zero joining and annual fees

Zero forex markup

Minimum FD: ₹20,000

FIRST WOW! Black

Experience premium lifestyle experiences and travel benefits.

Zero forex markup

Power of Mastercard and RuPay network

Up to 4 reward points per ₹150 spent

Minimum FD: ₹20,000

FIRST EARN

A great way to start your credit journey with a FD commitment.

FD as low as ₹5,000

No joining fee

Up to 1% cashback on UPI spends

8% bonus cashback on travel bookings

Hello Cashback

Earn more cashback on your bigger online spends. The more you shop online in a month, the higher your cashback.

Up to 5% cashback on online spends

1% cashback on UPI spends

Minimum FD: ₹10,000

Frequently Asked Questions

Can a homemaker or student get a secured credit card?

Yes, they can. Since approval is based on the fixed deposit and not on income or employment status, homemakers, students, and anyone without a formal income source can apply.

Does my FD get locked when I get a secured credit card?

Your FD is held as security for the card and cannot be withdrawn while the card is active. It continues to earn interest through the tenure, so your money is not sitting idle.

What happens to my FD if I miss a credit card payment?

If dues go unrecovered over time, the bank may use your FD to settle the outstanding amount. This is why paying your bill on time every month matters. It protects both your score and your deposit.

Can I increase my credit limit on a secured card?

Yes, with IDFC FIRST Bank's secured credit cards, you can increase your credit limit by adding to your FD. The enhancement is instant. Your limit updates as soon as the top-up is processed.

Is a secured credit card the same as a prepaid card?

No, a prepaid card is loaded with money that you spend on it. A secured credit card works like any other credit card, where you use the credit card and pay a bill at the end of the month. The FD is security held by the bank, not a balance you draw from.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.