What is a Secured Credit Card and How Does It Work in the Philippines?

It's not always easy to get approved for a typical credit card, especially for first-timers who don't have enough income documents or a good credit standing. Banks aren't keen on applicants with bad or no credit history.

Fortunately, if applying for a regular credit card doesn’t work out for you, you can always get a secured credit card.

Secured credit cards work like traditional credit cards but are easier to get approved for. Below, we explain how secured credit cards work and list banks in the Philippines that offer them.

What is a Secured Credit Card?

A secured credit card is a type of credit card that requires collateral in the form of a hold-out deposit, a percentage of which determines your credit limit.  

Generally, banks that offer secured credit cards require a minimum hold-out deposit of ₱10,000 to ₱30,000. Your credit limit can range from 70% to 90% of this amount, depending on the issuing bank and your preferred deposit account type.

The higher your deposit, the higher your credit limit. For example, if your hold-out deposit is ₱100,000 and the credit card limit is 90% of that amount, then the actual limit on your card is ₱90,000.

You can't withdraw your hold-out deposit until you clear and settle your balance. You also need to formally request a card cancellation or a lifting of your hold-out deposit.

This won't be a quick process, though. It usually takes around two months for banks to release the hold-out amount. But from that point on, you should be able to withdraw your cash.

What's the Difference Between a Secured Credit Card and a Regular Card?

Secured credit cards offer the same features as their regular version. The only difference is you have to open a savings or time deposit account with the issuing bank.

Plus, since it's guaranteed by your deposit, you can generally expect a quick and sure approval. With a regular credit card, banks can reject your application. 

Is It a Good Idea to Have a Secured Credit Card?

Banks don't require income documents for secured credit card applications, so these cards are ideal for people with bad or no credit history. The deposit amount reduces the risk to the issuing bank in case the cardholder fails to fully pay their balance on time.

This also makes secured cards ideal for first-time cardholders, low-income earners, and self-employed people with unstable incomes.

Even those with a regular credit card in good standing can benefit from a secured card. Say the bank approved a low credit limit on your card. You can apply for a secured credit card to get a higher credit limit—only if you deposit a considerable amount to your account, of course.

To decide if this is indeed the right financial tool for you, weigh the pros and cons of secured credit cards:

👍 Advantages of Secured Cards

• Is your credit card application always denied? With a secured credit card, you can get approved even if you have bad credit or no credit history.
• You don't have to submit proof of stable income.
• The credit limit is more predictable, as it's a percentage of the hold-out deposit. Get a higher credit limit by increasing your deposit.
• A secured card helps build a good credit history or improve your credit score. If you use your card responsibly and pay on time, this will reflect on your credit report and boost your creditworthiness.
• Missed a payment? No need to worry about agents from debt collection agencies. The bank would just take out the unpaid balance from your hold-out deposit.
• Your deposit may earn interest if your account is an interest-bearing one.
• You can qualify for a regular credit card if you make consistent on-time payments on your secured card.

👎 Disadvantages of Secured Cards

• A security deposit is required. You can't access your funds—even for emergencies—until your account is closed.
• The credit limit is tied to the hold-out deposit. If you can't make a large deposit, you'll have to make do with a low credit limit.
• Missed payments can still hurt your credit score.

What is the Best Secured Credit Card in the Philippines for 2024?

Banks like AUB,^[1] China Bank,^[2] RCBC,^[3] and Security Bank^[4] offer secured credit cards in the Philippines. There are many cards to choose from, but the best secured credit card will depend on your needs and lifestyle.

If you're looking for rewards, cashback, or annual fee waivers, there's a secured credit card for that. If you want a secured credit card with the lowest deposit requirement or the highest credit limit, there are options, too.

Check out this comparison table of secured credit cards in 2024:

Secured Credit Card	Available Card	Minimum Deposit	Credit Limit
AUB Secured Credit Card	Any AUB credit card	₱25,000	80% of deposit guarantee
China Bank Secured Credit Card	Any China Bank credit card	₱30,000 or US$750	85% of the security deposit for Peso deposit accounts; 70% for Dollar deposit accounts
RCBC InstaCard	Any RCBC credit card	₱10,000 for Peso Card or US$2,000 for Dollar Card	90% of the hold-out deposit
Security Bank Fast Track	Gold Mastercard and Platinum Mastercard only	₱25,000 for savings account	80% of the hold-out deposit

See also:

• Moneymax Reviews: Comparing AUB’s Budget-Tier Credit Cards
• Moneymax Reviews: Flex Your Financial Savvy with RCBC Flex Visa
• Moneymax Reviews: Go for Gold with a Security Bank Gold Mastercard

How to Apply for a Secured Credit Card in the Philippines

Decided on a particular secured card already? Generally, you can expect a smooth and straightforward secured credit card application process in the Philippines—it might be even simpler than getting a regular card.

Follow these steps:

Step 1: Ensure You're Eligible for a Secured Card

Although it's easier to qualify for a secured card than a regular card, you still have to meet the bank's eligibility requirements.

First, you have to be at least 21 years old. Also, you should be able to present a valid government-issued ID. Most importantly, you shouldn't have a delinquent account with the bank from which you plan to get a secured card.

Step 2: Choose the Right Credit Card for You

Usually, you can avail of any card in the bank's lineup as a secured credit card (except for Security Bank, which limits its secured card options). If you want to build a good credit score, select the card that will work for you—one that fits your budget, needs, and spending habits.

Shop around for options on the bank's website. You can also save time and effort with Moneymax, which you can use to compare credit cards and find the right one.

Step 3: Visit the Bank 

Once you pick a credit card, go to the nearest branch of your bank of choice to open a savings account or time deposit.

Bring your valid IDs and the amount for your hold-out deposit. If you're an expat or foreign resident, bring your work permit, Alien Certificate of Registration (ACR), or embassy accreditation documents just in case the bank asks.

Step 4: Submit the Required Documents

The bank staff will ask you to fill out and sign forms, such as a credit card application form, savings account opening forms, and a Deed of Assignment.

A Deed of Assignment is a legal document in which you authorize the bank to hold your deposit amount. In case you default on your payments, the bank can debit the hold-out amount to settle your unpaid balance.

Step 5: Wait for Card Delivery

The approval rate should be close to 100%. After all, you don’t put in a deposit for anything.

Processing of secured credit cards in the Philippines takes around three to 10 banking days. The card may be delivered to your address, or you may need to pick it up at the branch where you applied for it.

Lastly, activate the card by calling the issuing bank's customer hotline.

How to Use a Secured Credit Card

Not sure how to use secured credit cards? Use them like regular credit cards at any store or merchant that accepts Visa or Mastercard. You can also take advantage of typical benefits like welcome gifts, installment plans, rewards, cashback, and other perks, depending on the card you choose.

Secured cards also have the same fees and charges, as well as interest rates, as regular credit cards.

You’re still expected to make monthly payments. But if you default on a payment, the bank will take out the unsettled balance from your hold-out deposit.

Manage your spending to make sure this never happens. If your hold-out deposit reaches zero, you won’t be able to use your secured credit card anymore.

People usually opt for a secured credit card because of their negative credit history. If you fail to keep or manage it, this will be another negative blow to your credit score.

Secured Credit Cards in the Philippines: FAQs

1. Which secured credit card has the lowest deposit?

As of 2024, RCBC requires the lowest minimum hold-out deposit of ₱10,000 for a secured credit card. RCBC InstaCard also has the highest credit limit of 90% of the hold-out deposit.

Related: RCBC Credit Card Promos: 15 Best Deals in 2024

2. How to apply for a secured credit card online?

Banks don't offer online applications for secured credit cards for now. You need to apply at your preferred bank's nearest branch because you'll have to open a deposit account, which is something you can't do online.

3. How to cancel a secured credit card?

Contact the customer service hotline of your issuing bank to request card cancellation. Make sure to ask if there's any fee for canceling your secured card.

4. Can I convert my secured card to a regular credit card?

Yes, it's possible if you can show enough proof of income or if you’ve been paying your credit card bills on time and in full for at least a year. Once you convert your secured credit card to a regular one, you can withdraw your deposit without having to cancel the card.

Plus, a secured card can help improve your chances of getting approved for a regular card, as long as you maintain a good credit standing with your secured card provider.

Final Thoughts

Secured credit cards are a good alternative to traditional cards, especially if you have insufficient proof of income or want a higher credit limit. 

When used responsibly, a secured card can help build your credit and raise your chances of getting approved for credit cards and loans in the future. Don't waste this chance to get your finances on the right track!

Once you're ready, apply for a regular credit card. Check out these options for beginners and apply via Moneymax:

Credit Card for First-Timers	Features and Benefits
UnionBank Rewards Credit Card	Monthly income requirement: ₱15,000 Interest rate: 3% Perks: 3x points when you shop and dine here and abroad 1 never-expiring point per ₱30 spend
Metrobank Titanium Mastercard®	Monthly income requirement: ₱15,000 Interest rate: 3% Perks: 2x rewards points on dining, department store, and online purchases 1 point for every ₱20 spend
Security Bank Gold Mastercard	Monthly income requirement: ₱30,000 Interest rate: 3% Perks: 1 rewards point per ₱20 spend Secure online shopping with SecureCode
BPI Rewards Card	Monthly income requirement: ₱15,000 Interest rate: 3% Perks: 1 BPI Point per ₱35 spend Up to 36 months of installment terms Up to ₱2 million travel insurance coverage
BPI Edge Card	Monthly income requirement: ₱15,000 Interest rate: 3% Perks: 1 BPI point per ₱50 spend Flexible installment plans and payment options
PNB Ze-Lo Mastercard	Monthly income requirement: ₱10,000 Interest rate: 2.5% Perks: Zero annual fees for life No late payment or overlimit fees
AUB Easy Mastercard	Monthly income requirement: ₱50,000 Interest rate: 3% Perks: No annual fees for life 0% interest on new purchases Flexible credit card payment due date
AUB Classic Mastercard	Monthly income requirement: ₱50,000 Interest rate: 3% Perks: No annual fee for life 0% interest on new purchases 1 rewards point per ₱50 spend

Sources:

• ^[1] AUB Secured Credit Cards
• ^[2] China Bank Secured Credit Card
• ^[3] RCBC Credit Card Application Form
• ^[4] Security Bank Fast Track Secured Credit Card