Secured Credit Card: Your Fastest Way to Get a Credit Card

Not enough proof of income yet? No worries, this is how you get approved for a credit card.
Secured Credit Card
Via Pixabay

Applying for a credit card can sometimes be a frustrating experience, especially if you’re someone who doesn’t have enough credit history with the bank yet. 

Common scenarios: You may have just graduated from college and just started at your job. Maybe, you’re a freelancer. Or perhaps, you’re a self-employed individual.  

Can you really apply for a credit card if you’re just starting out? 

The answer is, YES YOU CAN.

In fact, I got my first credit card at the age of 22. At the time, I just graduated from college, I was freelancing, and I didn’t have enough credit history then. But I wanted to build my credit score as early as possible. So, I knew I had to get one. 

How did I do it? Read on as I show you the fastest way to get approved for a credit card through a bank program called secured credit cards.  

Introducing Secured Credit Cards

What is a Secured Credit Card?

What is a secured credit card?

A secured credit card is similar to a regular credit card you apply for from banks. You get a credit limit, incur interest charges, and earn points or rewards. 

The main difference is that a secured card requires a cash collateral (known as security deposit) to serve as your credit limit. 

In the Philippines, deposits usually start from 10,000 to 25,000 pesos. Generally, most banks offer 80-100% of the deposit to be your credit line. 

For example, if you deposit 12,500 pesos with BPI, your credit limit will be 10,000 pesos. If you want a bigger limit, then you need to deposit more money. 

Why do I need to deposit money?

You may be asking me why it’s called a credit card if you’re using your own money to purchase things. 

Point taken, but the goal isn’t for you to get a card so you can mindlessly buy things on credit (though it’d be nice to do that!). 

The goal is for you to build enough credit history so that banks will trust you with a regular card later on or you can have easy access to other financial products, like a personal loan or a business loan. 

To get a regular credit card, you have to understand that before a bank decides to issue you a credit line, they review your financial capacity to pay by looking at these things: 

Minimum Requirements for a Credit Card

Employment history 

at least 2 years tenure at your current company; if self-employed, business has to be in operation for 1 year

Annual Income 

minimum of P180,000 for employed individuals; P240,000 for self-employed

Credit history

must not have any outstanding debts or delinquent accounts anywhere

If you’re just starting out or you just recently switched jobs, then it’s not possible to meet the minimum requirements for approval.  

Hence, banks created their secured credit card programs. 

For me, it’s actually a wonderful opportunity for beginners to build a credit history while enjoying the benefits of a regular card.  

Can I get my deposit back?

Of course, you can. 

If you’re a responsible card holder after 6-12 months, you can request the bank to issue you a regular card and release your security deposit. 

Usually, they will review your account and would be happy to send you a regular card and refund your deposit if they find that you’ve been responsible in using the card.

However, if you’ve missed several payments and you’re regularly maxing out your credit card, then they may likely decline your request and would advise you to wait for another 12 months. Ouch!

Where to get a secured card

Ideally, you should get a secured credit card from the bank where you currently maintain a savings account with. 

That’s because getting one requires a savings account to withhold the security deposit from. 

On the other hand, it’s also easier to refund you the security deposit once you’re upgraded to a regular card.  

Here are the banks in the Philippines that currently offer a secured card program:

Bank Name Minimum Deposit Credit Limit Annual Fee Interest Rate
P10,000
90%
P1,350
3.50%
P10,000
90%
Waived for the first year
2.50%
P12,000
90%
No annual fee for life
3.50%
P15,000
80%
Waived for the first year
3.50%
P25,000
80%
No annual fee for life
3.50%

Secured Card Application for Beginners

Secured Card Application

Generally, your card application will be smooth and straightforward. If you’re interested in getting one, then follow these steps:

  1.  Ensure that you meet the eligibility requirements

Visit the website of the bank you wish to apply for or call their customer service hotline. 

Generally, you must be over 18 years old and must not have any outstanding credit card dues .

 

      2.  Pick the right card for you

Choose the right card that fits your budget, needs, and spending habits.  

If you’re just starting out and only looking to build a good credit score, I recommend you get the card that requires the least minimum deposit and use the card sparingly. 

      3.  Visit the nearest bank

Once you’ve decided on the right card for you, visit the nearest branch of the bank you wish to apply for. 

Bring at least two valid IDs, the minimum security deposit, and all the other documents they require. 

      4. Submit your documents and fill out forms

Approach any bank personnel and say that you wish to apply for a secured credit card. They will then ask you to fill out and sign the necessary forms.


PRO TIP

Specifically tell the personnel the name of the secured card product you want to apply for as some (especially newbies) confuse a secured card application with a regular one.

5. Wait for the card delivery
Most banks guarantee a 100% approval rate for most secured credit card applications. 

After all, you’re not depositing your hard-earned money as a collateral for nothing. 

Generally, it would take 3-10 business days to process your application. You can also choose to have the card delivered to your address or you can pick it up at the branch.  

How to upgrade a secured credit card to a regular one

If you want to upgrade your secured card to a regular card, it’s important to maintain a good credit standing with the bank. 

To increase your chances of qualifying for a regular card in the shortest amount of time possible, do these:

  • Pay your dues in full and on time. 
  • Use no more than 30-40% of your credit limit (also known as good credit utilization ratio).
  • Never take out a cash advance on your card (it has higher interest rates and shows the bank you’re likely to default on payments).


POINT TO REMEMBER

If you're not good at handling your payments even with a secured credit card, why would a bank trust you with an unsecured one?

Final thoughts

A secured credit card is a good alternative for you if you’re just starting out with your career. 

It helps you build a good credit history and gets you started with your journey to personal finance. 

Lastly, I hope this article helps you get your very first credit card. If you have further questions, let me know in the comments below. 

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Dee Luchavez

Dee Luchavez

I'm a full-time financial advisor and a part-time front-end developer. In my free time, I like building pretty websites, spending time with my nieces, or learning how to cook.

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