If you’re one of those who can never get approved for a credit card, perhaps it’s time to consider getting a secured credit card. Read on to find out more about it.
What’s a secured credit card?
A secured credit card has your savings account or time deposit as collateral. And because it’s linked to a bank account, you can expect 100% credit card approval.
Usually, your credit limit is 90% of the holdout amount. So if you have 50,000 PHP in your account, your credit card limit will be 45,000 PHP.
And if you miss on a credit card payment, the bank will simply deduct the amount due from your bank account.
You can get your money back should you decide to cancel your card. It usually takes 60 to 90 days to process, depending on your bank. All unpaid dues should be settled, of course.
Most banks require a minimum deposit of 10,000 PHP. But if you want a higher credit limit, you need to deposit more.
The advantages of a secured credit card
100% approval
Because there are no credit checks and no income documents required, there’s 100% approval.
It’s perfect for people who have a bad credit history and want a credit card for emergencies.
It’s also good for fresh graduates or young professionals who want a credit card but don’t meet the banks’ income requirements.
You can choose your credit limit
If you want a higher credit limit, just deposit a higher amount. Unlike regular credit cards, a request for a higher credit limit is subject to bank approval and on your credit history and financial capacity.
No collection agents to deal with
If you default on a payment, your bank can deduct the payment from the holdout amount.
Build or repair your credit history
Using a secured credit card responsibly can help you improve your credit score and even qualify you for a regular credit card.
As long as you pay on time, it will keep you in good standing. Which will be beneficial if you plan to apply for a loan or a credit card in the future.
The disadvantages of a secured credit card
Required deposit
To get a secured credit card, you need to have a savings or time deposit account. And if you want a higher credit limit, you need to make a higher deposit.
This poses a challenge if you don’t have enough funds for the credit limit you want.
Higher interest rates
You may not get the most competitive interest with secured credit cards. Since there are no credit checks or income requirements, they may have higher interest rates.
Limited perks and benefits
Compared to regular credit cards that let you earn points with every purchase, some secured credit cards don’t have this rewards program.
You can’t get your money in an emergency
Because you need to settle your balance first and wait several weeks before you can get your deposit, you can’t use that money when something unexpected happens.
If you miss a payment, your credit score takes a hit
Even if banks can deduct the amount from your deposit, your credit score will be affected by the late payment and other late charges.
Which secured credit cards can you get in the Philippines?
There are a few that you can choose from depending on minimum deposit amounts or credit limits. Check this table below:
| Bank | Minimum Deposit | Credit Limit |
| Security Bank Fast Track Secured Credit Card | 10,000 PHP in Savings
100,000 PHP in Time Deposit |
80% of holdout amount |
| BDO Secured Credit Card | 15,000 PHP in Savings or Time Deposit | 90% of holdout amount |
| AUB Secured Credit Card | 25,000 PHP to get the AUB EASY Mastercard | 80% of holdout amount |
| RCBC Bankard Secured Card | 10,000 PHP / 2,000 USD | 90% of holdout amount |
| BPI Express Start | 10,000 PHP in ATM and Passbook
50,000 PHP in Time Deposit |
90% of holdout amount |
Security Bank Fast Track Secured Credit Card
This savings or time deposit account from Security Bank comes with an approved credit card.
It has a credit limit of 80% of your holdout amount. Both new and existing Security Bank clients can apply for this card.
The minimum holdout or deposit amount is 10,000 PHP for savings and 100,000 PHP for time deposits.
You have the option to open any of the Security Bank accounts (Easy Account, Build-Up Savings, Premium Build-Up Savings, Money Builder, Time Deposit) and apply for their Mastercard credit cards (Classic, Gold, Complete Cashback, Platinum, World).
Annual fees for the first year are waived. You are also eligible to earn reward points and rebates whenever you use your credit card for purchases.
The credit card application process usually takes 3 banking days. Should you decide to cancel your card and withdraw your deposit, you need to wait 30 days.
BDO Secured Credit Card
To get a secured credit card from BDO, you need to have a minimum of 15,000 PHP in savings or time deposit.
Your credit limit is 90% the holdout amount.
Applicants should also be 21 to 70 years old and have a mobile or landline phone number.
You only need to fill out the credit card application form and the Deed of Assignment, and provide a valid ID with signature and photo.
Foreigners can also apply and present their ACR (Alien Certificate of Registration) or ICR (Immigrant Certificate of Registration), as well as a letter from the embassy.
AUB Secured Credit Card
The required deposit will depend on which AUB credit card you want to have. Refer to these images below:
You can also apply for the AUB Platinum Mastercard with a higher credit limit starting from 200,000 PHP to as much as 10 million PHP.
Applicants need to be at least 21 years old. To apply, simply visit your nearest AUB branch and accomplish the credit card application form and the Deed of Assignment.
Processing of your credit card usually takes 7 to 10 banking days.
Should you wish to cancel the holdout and get your deposit, the process usually takes 60 days.
RCBC Bankard Instacard
This secured credit card from RCBC offers free annual fees in the first year.
Choose which credit card you want and then go to your nearest RCBC branch to open an InstaCard account. The minimum deposit is 10,000 PHP.
You will also need to accomplish the account opening forms and the Deed of Assignment.
Make sure to bring valid IDs, and applicants must be at least 21 years old.
If you want to cancel your card, you can get the holdout amount after 60 days.
BPI Express Start
To get the BPI Express Start, you must be at least 18 years old and have a residential or business landline number.
The minimum amount is 10,000 PHP for an ATM or passbook account, and 50,000 PHP in time deposit.
Your credit limit is 90% of the holdout amount.
How to use your secured card responsibly
Use it only when you really have to
If you have the cash to spend, pay in cash. Remember to only use your credit card for emergencies or for important purchases.
Even if you have a high credit limit, don’t be tempted to max it out. Just think about how much you will be paying monthly if you max out your card.
Pay your credit card bill in full
Not only will this help you save money in credit card charges, you will also be building up your credit profile.
Don’t spend too much
Even if you have a holdout amount that can pay for your dues, don’t spend more than you need to. If possible, keep your spending to 20% or 30% of your credit card limit.
The Bottomline
A secured credit card works just like a regular credit card. The only difference is that you need to put in a collateral.
It’s great to have if you’re only starting to build your credit or if you want to repair your credit score.
Unlike regular credit cards that require you to be employed and have a monthly income, secured credit cards don’t require income documents.
This makes it a great option for freelancers with no regular income but would like the perks and convenience of a credit card.
It’s also recommended for those who are employed but don’t meet the income requirements of some banks.
The goal is to convert a secured credit card to a regular one. This is possible if you establish a flawless record in paying on time, and if you’re able to submit proof of regular income.
Do you have a secured credit card? Which feature do you like the most? Share your thoughts in the comments!