Building Credit Responsibly With Secured Credit Cards In Singapore

Alevin Chan

Alevin Chan

Last updated 24 January, 2024

Secured credit cards require a hefty cash collateral, but offer the same level of cardholder benefits. Could they be the ideal alternative for those who do not satisfy credit card eligibility requirements? 

Credit cards have been so entrenched in our everyday lives that it’s hard to imagine going without one. However, ubiquitous as they are, not everyone may be able to qualify for one. For instance, you may be too young, too old, or don’t make the annual income requirement (or don’t have the necessary paperwork to prove you do.)

You could also find yourself failing to qualify for an unsecured credit card due to a poor credit score or a lack of credit history – the latter can happen if you’re new to Singapore, as credit histories do not carry over. 

In this case, your options are to use a debit card or prepaid card for cashless payments, but that means giving up all those awesome credit card perks and privileges. 

But before you settle for less, know that there’s a third option – you could try applying for a secured credit card to enjoy the same level of cardholder benefits!

 

Table of contents

What is a secured credit card and how does it work?

Conventional credit cards are unsecured credit facilities. That means that the credit limit that comes with each card is available to use freely and without putting up any collateral. In return, you agree to repay the amount spent within the grace period, failing which you will incur interest charges. 

Because of this, applicants are required to satisfy the annual income requirement when applying for a credit card. This is to ensure that you have the financial wherewithal to repay your credit card bills.

What if you no longer earn an income, or maybe you live off a trust fund and don’t have to work for a living? Well that’s where secured credit cards come in. 

A secured credit card is one which accepts collateral in lieu of satisfying the annual income requirement. In Singapore, this takes the form of a S$10,000 cash deposit, which is held by the bank as long as the credit card is active. This amount is not fixed – depending on your profile and requirements (maybe you want a high credit limit, for example), you may be asked to put up a higher collateral. 

This cash collateral will be used to settle claims against you for unpaid credit card debt, and thus cannot be used to pay for other expenses. Commonly, this collateral is held in a fixed deposit or other similar account, and earns interest according to the bank’s usual practices. However, this is not mandatory, and you should check how your collateral will be handled, including whether interest will be given. 

 

Secured credit card – pros and cons

Pros

Cons

Grants same benefits and privileges, no difference in usage from conventional credit cards

Requires high cash collateral, minimum S$10,000 

Responsible use can help improve or build up credit score

Collateral stays locked-up as long as credit card is active

Cash collateral earns interest if kept in relevant account (such as a fixed deposit)

Collateral cannot be used to pay credit card fees and charges, such as annual fees


Pros of secured credit cards

Secured credit cards are functionally identical to their unsecured counterparts. This means you can enjoy the full scope of cardholder privileges, perks and rewards, just like any other cardholder. Thus, if there’s a credit card with benefits you want, but don’t quite clear the eligibility conditions, enquire if there’s a secured version you can apply for instead. 

Secondly, a secured credit card can be used to help improve your credit score or to build up a credit history – provided you pay off your credit card bills on time each month. Successfully doing so will establish your ability to be a responsible borrower, which will increase your creditworthiness and ultimately pave the way to other unsecured facilities down the line, such as personal loans and mortgages. 

Thirdly, your cash collateral can earn interest while it’s being held by the bank. This is a good way to reap some returns on cash that you can’t put to use in any other way. 

Cons of secured credit cards

By far, the largest argument against a secured credit card is the large sum required as collateral. As mentioned, you’ll need at least S$10,000 to be deposited, possibly more under certain conditions. 

Also, this money will need to remain locked up to keep your secured credit card active, or until you qualify to transition to an unsecured credit card account. That means you’ll need to plan ahead and ensure you can make do without having to tap on this sum of money. 

Note that your collateral can  only be used to secure your credit facility, and nothing else. It cannot be used to pay for your fees and charges, such as credit card annual fees and interest charges.

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Should you get a secured credit card?

Now that you understand how secured credit cards work, and the pros and cons associated with them, you may be wondering if you should get one. 

Well, credit card perks and benefits are pretty attractive, and can help you save quite a good bit if you’re savvy with their use. However, you should weigh the opportunity cost of having to put up the collateral, although the interest you can earn will help balance things out somewhat. 

At the end of the day, S$10,000 may not be such a large amount to warrant too much overthinking. If you have the cash just lying around, and really want to own a certain credit card, going ahead with your application won’t be the worst decision. 

 

What secured credit cards are available in Singapore?

Secured credit cards aren’t as widely advertised as conventional, unsecured ones. Still, there’s a good chance that most (if not all) credit cards are available on a secured basis. This is up to the provider, so your best course of action is to contact the issuing bank and ask.

You may not be able to apply for a secured credit card through the usual online channels, but it’s conceivable that you simply need to fill in a different application form. Again, do check with your banks for details. 

To help you narrow down your search, here are some secured credit cards available in Singapore. 

DBS credit cards

If you do not meet the annual income requirement (at last S$30,000 for Singaporeans and S$45,000 for foreigners), DBS offers its credit cards on secured terms as well. 

Here’s the list of secured credit cards you can choose from:

Interestingly, this list includes the DBS Vantage Visa Infinite Card, which is a premium card that requires at least S$120,000 in annual income to qualify. As such, you should expect a higher cash collateral for this card. 

DBS/POSB Credit Card Welcome Gift: Receive up to S$388 cashback or 85,000 miles when you apply for select DBS credit cards and fulfil the relevant promotion criteria. T&Cs apply.

 

HSBC credit cards

Another well-known card provider is HSBC, which offers a selection of its popular credit cards for secured applications. Here’s the list we found online. 

Enjoy the following rewards when you sign up for an HSBC credit card.

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⚡Flash Deal⚡: Get a PlayStation 5 Disc Version (worth S$799) or a Dyson Airwrap (worth S$859) or S$500 e-capita Vouchers when you are one of the first 500 to apply and spend a minimum of S$500 by the end of the following calendar month from the card account opening date. Remaining applicants will enjoy SingSaver Exclusive rewards. Valid till 4 June 2024. T&Cs apply

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SingSaver's Exclusive Offer: Receive a Dyson Supersonic™ hair dryer (worth S$699) or an Apple iPad 9th 10.2" WiFi 64GB (worth S$508.30) or S$350 eCapitaVoucher or 21K Max Miles upon activating and spending min. S$500 by the end of the following calendar month from the card account opening date. Valid till 4 June 2024. T&Cs apply.

For HSBC TravelOne Card: Receive the above rewards when you activate and spend a min. S$500 plus pay an annual fee of S$196.20 by the end of the following calendar month from the card account opening date. Valid till 4 June 2024. T&Cs apply.

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Plus, upgrade your rewards when you top up S$200 to get a Sony Portable Theatre System HT-AX7 (worth $$759). Alternatively, top up S$1,099 for an Apple MacBook Air 13” (M3 chip) 256GB (worth S$1,599) or an Apple iPhone 15 Pro 128GB (worth S$1,664.25). Valid till 4 June 2024. T&Cs apply.


CIMB credit cards

If you’re a customer of CIMB, you may be glad to know that the bank offers secured credit cards as well.

Welcome Offer: Receive S$88 Cashback when you make a minimum of S$108 eligible spends within 30 days of card approval date. Plus, receive S$100 Cashback (S$188 in total) when you increase your minimum eligible spends to S$988 within 60 days of card approval date. Valid till 31 July 2024. T&Cs apply.

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An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.

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