Looking for a way to increase your spending power without the risk of falling into credit card debt? If you’re one of the applicants who can never get an approved credit card, secured credit cards are the best option.
This is also an excellent way to build a credit score and history, especially if you’re just starting your career or professional life. Let’s explore the moneysmart top picks and compare the features and interest rates.
What’s a secured credit card?
A secure credit card is a credit card that requires a security deposit from the cardholder. The purpose of the security deposit is to reduce the risk for the credit card issuer. If the cardholder fails to pay their credit card bills, the issuer can use the security deposit to cover the outstanding balance.
Usually, the credit limit is around 80% to 90% of the holdout amount. Say you have ₱50,000 in your account. Your credit card limit will be ₱45,000. Suppose you missed on a credit card payment, the bank will simply deduct the amount due from your bank account.
Should you decide to cancel your account, the issuer will take about 60 to 90 days, depending on the bank. You must also settle all unpaid dues before requesting a cancellation.
The advantages of a secured credit card
Excited to get your first credit card? Check out these advantages once you get yours.
100% approval
There are no credit checks and no proof of income documents required. Expect 100% approval.
It’s ideal for consumers who have a negative credit card history and want a card for emergencies.
Fresh graduates, young professionals, and freelancers who want a credit card but don’t meet the bank’s requirements can apply.
Set your credit limit
Want a high credit limit? Deposit a higher amount. Unlike regular credit cards, a request for a higher credit limit is subject to bank’s approval. The decision is based on credit history and financial capacity.
Setting your own credit limit is advantageous because it lessens the temptation of maxing out a card and overspending.
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.
The disadvantages of a secured credit card
Watch out for these disadvantages before you sign the fine print.
Required deposit
The bank will require you to open a savings or time deposit account. You will have to go through the process of opening an account and submit basic requirements like two valid IDs.
You must make a higher deposit if you want a higher credit limit. 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 in Savings
₱100,000 in Time Deposit |
80% of holdout amount |
| BDO Secured Credit Card | ₱15,000 in Savings or Time Deposit | 90% of holdout amount |
| AUB Secured Credit Card | ₱25,000 to get the AUB EASY Mastercard | 80% of holdout amount |
| RCBC Bankard Secured Card | ₱10,000 / $2,000 USD | 90% of holdout amount |
| BPI Express Start | ₱10,000 in ATM and Passbook
₱50,000 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 a secured credit card. It’s open to both existing Security Bank clients and new-to-bank clients. Other features include:
- Offers a credit limit of 80% of your holdout amount.
- The minimum holdout or deposit amount is ₱25,000 for savings and ₱100,000 for time deposits.
- Open any Security Bank accounts such as:
1. Easy Account
2. All Access Checking Account
3. Build-Up Savings Account
4. Premium Build-Up Savings Account
5. Money Builder
6. Time Deposit - Apply for Mastercard credit cards like:
1. Gold
2. Platinum Mastercard
3. Next Mastercard - 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.
- Three banking days for credit card processing.
- Processing of request for lifting the hold amount takes 30 banking days.
BDO Secured Credit Card
BDO Secured Credit card gives you a peace of mind that you will be approved 100% when you visit a branch should you wish to apply. Other features and details you should know are:
- Offers 90% of the holdout amount in a Peso account, and 80% on your Dollar deposit.
- The initial deposit is ₱10,000 in savings or time deposit.
- Applicants at least 21 years of age with a mobile or phone number are eligible to apply.
- Requirements include a duly filled out credit card application form, deed of assignment, valid ID with signature and photo.
- Foreigners can also apply and present an ACR (Alien Certificate of Registration) or ICR (Immigration Certificate or Registration), and letter from the embassy.
- Release of holdout amount or deposit will take 60 days after card cancellation.
AUB Secured Credit Card
The required deposit will depend on which AUB credit card you want to have. Refer to these images below:
Image screenshots from AUB website as of 27 April 2023
Here are the highlights of AUB secured credit card:
- Enjoy a credit card limit of 80% of your holdout amount.
- Apply for the AUB Platinum Mastercard with a higher credit limit starting from ₱200,000 to as much as ₱10 million.
- Applicants must be at least 21 years old. Visit your nearest AUB branch and accomplish the credit card application form and the Deed of Assignment.
- In case you cancel the card and get the holdout amount, the process will take 60 days.
RCBC Bankard Instacard
This secured credit card from RCBC offers free annual fees in the first year. Determine the credit limit you want and take full control of your credit line. Here are some features worth mentioning:
- Open a savings account and enjoy 95% of the holdout amount as your credit limit.
- The minimum deposit is ₱10,000.
- The membership fee is waived for the first year.
- Applicants must be at least 21 years old. Submit a duly accomplished application form and Deed of Assignment.
- The holdout amount is released 60 days after you request cancellation.
BPI Express Start
Last but not least, you have this secured credit card, which you can apply for as long as you open an account with the minimum deposit. Check out the following details:
- Your credit limit is 90% of the holdout amount
- The minimum deposit is ₱10,000 for an ATM or passbook account and ₱50,000 in a time deposit.
- Applicants must be at least 18 years old and have a residential or business landline number.
How to use your secured card responsibly
That plastic card can either make or break your credit history. Be sure to swipe it conscientiously.
1. Use it only when you really have to
If you have the cash to spend, pay in cash. Remember only to use your credit card for emergencies or necessary purchases.
Even if you have a high credit limit, don’t be tempted to max it out. Just think about how much you will pay monthly if you max out your card.
2. Pay your credit card bill in full
Not only will this help you save money on credit card charges, you will also be building up your credit profile. The best way not to miss your due date?
Put it on your calendar. Set a snooze or a reminder three to five days before the due date.
Set another reminder a day before to get notified — last minute.
3. 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.
Keep your spending to 20% or 30% of your credit card limit if possible. Maintaining a good debt-to-income ratio helps you avoid overspending.
The Bottomline
A secured credit card works just like a regular credit card. The only difference is that you must put in a security deposit or holdout amount.
It’s great if you’re only starting to build your credit or want to repair your credit score.
Unlike regular credit cards that require employment and monthly income, secured credit cards don’t need income documents.
This makes it an excellent option for freelancers with no regular income but who would like the perks and convenience of a credit card. It’s also recommended for those employed who 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 of 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.