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Guide to secured credit cards

Secured credit card options in Singapore are limited, but this is how they work and if they may be an alternative for you to consider.

In Singapore, most credit cards are unsecured lines of credit. However, secured credit cards are also available for those who are unable to meet the eligibility requirements for unsecured ones.

This guide looks at the differences between secured and unsecured credit cards as well as options available if you have bad credit.

What is a secured credit card?

Secured credit cards are designed for people with bad credit, and they are used to help build-up credit history. These types of credit cards require collateral that’s typically made in the form of a fixed deposit. A lender can offset the debt using the deposit as collateral, in case you were to default on your repayments. That’s why it’s considered to be ‘secured’, from a bank’s viewpoint.

The approved credit limits you get with this type of credit card is determined by the fixed deposit savings you put down during application. You must make regular repayments and you will accrue interest on any unpaid balances. There is usually an interest-free period if you pay your account in full each statement period. Using the card to withdraw money from an ATM will incur interest charges immediately.

Features of a secured credit card

Your cash deposit is held by a bank that allows you to get a secured credit card. These are the features you can usually expect from a secured credit card:

  • Credit limit. Providers offer a credit limit that is equal to your fixed deposit.
  • Cash transactions. Using a secured credit card to withdraw money from an ATM will incur interest charges right away.
  • Interest charges. The interest rates for secured cards are generally lower than conventional or unsecured credit cards. Interest charges will apply on any balance you have not paid by the statement due date.
  • Credit tracking. The credit card provider will send reports to credit agencies about your repayment history.

How does a secured credit card differ from a secured debit card?

Here are some of the features that set it apart from a debit card:

  • Credit limit attached. A secured credit card is a line of credit from a bank. A cash deposit of your own money is used as a security. The financial institution issues a credit limit based on the size of the deposit. You’ll need to repay what you spend in addition to any interest charges. Also, you will have to pledge a minimum fixed deposit amount of S$10,000.
  • A debit card is linked to your transaction account. This is the account most people get their pay deposited into, use to make everyday purchases and ATM withdrawals. A secured credit card can be opened with a single cash deposit. You’re given a line of credit you can continue to use as long as you can make repayments. Debit cards and secured credit cards offer similar features at the checkout and online security features.
  • Rewards and offers. A secured credit card may not extend as many offers as unsecured credit cards do.
  • Fixed deposit funds withheld. You cannot withdraw your fixed deposit as long as you own a secured credit card against that particular fixed deposit account.
  • Repayments. You must make regular repayments when you spend using a secured credit card.
  • Bankruptcy option. You can apply for a debit card account if you’re bankrupt. However, some secured credit cards won’t approve your application if you’ve been bankrupt in the past two years.
  • Credit score. A secured credit card provider will report your regular repayments to credit reporting agencies, which can help improve your credit score.

How does a secured credit card compare to a personal loan?

You can compare the differences between these two lines of credit below:

Secured credit card Secured personal loan
Security Cash depositYou may be asked to use a car as security
Credit limit Set by cash securityN/A
Eligibility Bad creditGood credit
AvailabilityAvailable in SingaporeAvailable in Singapore

Who are secured credit cards best suited to?

Secured credit cards are usually suited to cardholders who have bad credit and want to use a card in order to rebuild their credit history. However, there are several reasons you may not qualify for an unsecured credit card.

  • You are self-employed or unemployed. If you’re self-employed or earn a commission-based salary, you need to submit your latest 2 years’ Notice of Assessment. If you’re unable to provide proof of stable income, you’ll most likely be unable to qualify for an unsecured credit card.
  • You have a low annual income. To qualify for an unsecured credit card, your annual income needs to be above S$30,000.
  • You are retired. You may not have an annual income of S$15,000 or assets worth at least S$750,000.
  • You have a poor credit history. Having a bad credit history will generally prevent you from getting an unsecured credit card.

Singapore secured credit card providers

Penalty rates and late payment fees to watch out for

Fees apply if you don’t make your credit card repayments by the due date. Late payment fees can be as high as S$80, so be sure to pay by the due date on the statement. You can try changing your repayment frequency or set up an automatic direct debit to ensure you pay your account on time.

Pros and cons of using a secured credit card

Pros

  • Credit history. Secured credit card providers send reports to credit agencies about your repayment history. This can help to improve your credit history and credit score.
  • Bad credit alternative. You can apply for a secured credit card if you have a bad credit history.
  • Interest-free days. You can get interest-free days on your credit card purchases if you pay your balance in full by the statement due date.

Cons

  • Limited credit. Your credit limit is often limited to the amount of money you deposit.
  • Interest. Paying fees and interest on money you’ve deposited to the bank is unnecessary. Be sure to only spend what you can afford to repay within the interest-free period.
  • Annual fee. These cards usually come with an annual fee, so it’s important to make sure the extra features offered with a secured credit card are enough to justify the annual fee.
  • Risk. You will lose your deposit if you fail to make the repayments on your balance amounts

Compare a range of bad credit loans here

Frequently asked questions

Compare credit cards in Singapore

Name Product Reward Cashback Offer Annual Fee Min Income - Singaporean and PR
HSBC Revolution Credit Card
Earn up to 10X Reward points or 4 miles per $1 spent on qualifying purchases.
Receive up to $200 cashback. T&Cs apply. Ends 31 Dec 2022.
$0 annual fee
$30,000
New cardholders can choose from a Samsonite Prestige 69cm Spinner Exp with built-in scale (worth $670) or $200 cashback upon $500 minimum spend. Plus, receive up to $150 cashback when you apply for supplementary cards. Existing HSBC credit cardholders are eligible to receive $50 cashback. T&Cs apply. Ends 31 Dec 2022.
American Express Singapore Airlines KrisFlyer Ascend Credit Card
For every $1 spent, earn 1.2 KrisFlyer miles on local purchases, 2 KrisFlyer miles on overseas spend in June and December, Singapore Airlines and KrisShop and 3.2 KrisFlyer miles on Grab.
N/A
$337.05 annual fee
$50,000
Get 10,000 KrisFlyer miles upon annual fee payment and first transaction within 30 days from card approval. An additional 15,000 KrisFlyer miles when you spend $3,000 within the first 3 months of card approval. Valid until 31 Jan 2023. Also, earn 3,600 KrisFlyer miles based on the $3,000 spend above (based on 1.2 KrisFlyer miles per $1 spent locally). T&Cs apply.
Citi Prestige Card
Deals and discounts in more than 90 countries. Also, get six complimentary golf games across Asia
Up to 20% cashback at selected merchants
$535 annual fee
$120,000
Receive 120,000 ThankYou Points (48,000 Miles) when you pay the annual fee ($535) and spend $800 within two months. T&Cs apply. Valid until 31 Oct 2022.
HSBC Visa Platinum Credit Card
Earn 1 Reward point for every $1 on all spend.
Up to 5% cash rebates on groceries, dining and fuel with minimum monthly spend of at least $600.
$0 annual fee for the first 2 years and $192.60 thereafter
$30,000
New cardholders can choose from a Samsonite Prestige 69cm Spinner Exp with built-in scale (worth $670) or $200 cashback upon $500 minimum spend. Plus, receive up to $150 cashback when you apply for supplementary cards. Existing HSBC credit cardholders are eligible to receive $50 cashback. T&Cs apply. Ends 31 Dec 2022.
American Express Platinum Credit Card
Up to 50% off your food bill for unlimited visits at hotels around Singapore
N/A
$321 annual fee
$80,000
Get $100 CapitaVoucher upon payment of annual fee and first transaction within 30 days from card approval. An additional $100 worth of CapitaVouchers when you spend $2,000 within the first 3 months of card approval. Also, receive 2,500 Membership Rewards points from your base earn rate for the $2,000 spent. T&Cs apply. Valid until 31 Jan 2023.
Citi Cash Back+ Credit Card
Get up to 14% fuel discounts at Esso and Shell and 1.6% cash back on eligible retail purchases.
1.6% cash back on selected retail purchases
$0 annual fee for the first 1 year and $192.60 thereafter
$30,000
Receive 10% cash back (up to $300 cash back) on up to $3,000 spend in the first 2 months. T&Cs apply. Valid until 31 Oct 2022.
HSBC Advance Credit Card
Receive up to $200 cashback when minimum spend requirements are met.
Enjoy up to 3.5% cashback on all purchases with no minimum spend
$0 annual fee for the first 1 year (permanently waived for HSBC Advance banking customers) and $192.60 thereafter
$30,000
New cardholders can choose from a Samsonite Prestige 69cm Spinner Exp with built-in scale (worth $670) or $200 cashback upon $500 minimum spend. Plus, receive up to $150 cashback when you apply for supplementary cards. Existing HSBC credit cardholders are eligible to receive $50 cashback. T&Cs apply. Ends 31 Dec 2022.
American Express True Cashback Card
Enjoy 1.5% cashback on all purchases with no minimum spend or cap. Plus receive up to $80 CapitaVouchers when a minimum spend of $250 is made in the first month.
Earn 1.5% cashback on all eligible spending with no minimum spend or cap
$0 annual fee for the first 1 year and $171.20 thereafter
$30,000
Apply today and get a 3% cashback bonus when you spend $5,000 in the first six months.
Citi Cash Back Card
Get up to 20.88% fuel discounts at Esso and Shell, 6% cashback on dining and 8% cashback on groceries.
6% cash back on dining, 8% cashback on groceries and petrol transactions. 0.25% cashback on other retail purchases, capped at $80 for all transactions per statement month.
$0 annual fee for the first 1 year and $192.60 thereafter
$30,000
Get a welcome gift of $300 cash back when you spend $800 in the first two months. T&Cs apply. Ends 31 Oct 2022.
Aspire Corporate Card
Enjoy exclusive perks and discounts with Aspire's extensive range of partners, redeemable at anytime
1% Cashback for qualified spend of above S$5,000. T&Cs apply
$0 annual fee
N/A
A corporate debit card for SMEs and Startups with no annual fee and low FX fees. Enjoy 1% cashback on marketing and SaaS spend. T&Cs apply.
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