Credit cards are widely used around the world because they provide instant credit. They are regarded as a blessing because they make spending simpler and more convenient. Furthermore, you are not required to carry cash at all times. Banks, on the other hand, do not give credit cards to everyone who applies. Customers with insufficient income or a poor credit score have been reported to be denied credit cards by financial companies. Secured credit cards against set deposits can help in this situation. In this article, we will learn more about Credit Card against Fixed deposits (FD).
Let’s look at the notion of credit cards against fixed deposits, how they function, who qualifies for them, and everything else you need to know about them in this blog.
What is a Credit Card against Fixed Deposit?
A credit card against FD is granted by a bank in exchange for an FD that the consumer offers as collateral/security for the card, as the name implies. It’s perfect for consumers who have no credit history or a poor credit score*. Customers who have an FD account with the bank and want to develop their credit profile can get secured credit cards from banks and financial institutions.
Note: A credit score is a number that measures a person’s creditworthiness, or capacity to repay a loan. The figure is between 300 and 850. The higher the credit score, the more likely the customer will be able to obtain a loan with favorable terms and circumstances.
How does FD act as collateral to avail a secured credit card?
Customers are typically offered credit cards by banks and financial institutions depending on their credit history, income level, and other considerations. The nature of these credit cards is that they are unsecured (meaning they are not backed by collateral or security which can be attached in case the cardholder defaults on the credit card payment).
In the case of a credit card secured by a fixed deposit, however, you only need a bank account with a fixed deposit. This can be used as security or collateral, allowing the consumer to borrow money despite having poor credit or an uncertain income. The bank places a lien (a claim or a legal right) on the FD after issuing such a secured credit card until the customer returns the credit card.
Best Credit Card against Fixed Deposit in India
Let’s take a look at the finest credit cards in India for fixed deposits:
|Credit Card||Credit Card Name||Minimum FD Amount||Features|
|Axis Bank||Insta Easy Credit Card||₹20,000||Cash withdrawals up to 100% of credit limit from the first day, 50 days free credit, and a credit limit of 80% of the FD amount.|
|SBI||SBI Unnati||₹25,000||For the first four years, there are no annual fees, 1 reward point for every $100 spent, and a 1% fuel cost waiver for any transactions between $500 and $3,000.|
|ICICI Bank||ICICI Bank Instant Platinum Credit Card||₹10,000||If you have a valid FD account, there is no yearly fee; exciting visa deals on wellness, hotels, and restaurants; and a 1% fuel surcharge waiver on a transaction of up to 4,000 rupees at HPCL pumps.|
|Kotak Bank||811 #DreamDifferent Credit Card Online||₹15,000||There are no yearly or membership fees. Fuel and railway surcharges are waived, plus you get 500 bonus reward points when you activate your card and spend $5,000 in the first 45 days.|
|Yes Bank||YES Prosperity Rewards Plus Credit Card||₹30,000||Accelerated rewards for purchases made at supermarkets and grocery businesses Petrol surcharges would be waived at all fuel stations across India. Every anniversary year, 12,000 bonus reward points are awarded for spending 3.6 lakhs or more.|
Eligibility Criteria for a Credit Card against Fixed Deposit
Depending on the reason for which the card is used, credit card eligibility criteria may vary from one bank to the next. The following are some of the most important eligibility criteria:
- A fixed deposit account must have a minimum term of six months.
- Applicants must be at least 18 years old to be considered.
- Applicants must have an FD account with the bank in question.
- A credit card secured by a fixed deposit is only offered to Indian residents and is not available to international nationals.
- To apply for a secured credit card, an FD account must have a minimum balance of $10,000..
Who Can Apply For Credit Card against Fixed Deposit
People who fit into any of the following categories are eligible to apply for a credit card backed by FD:
- People with no proof of income
- People with low-paying or entry-level occupations
- People with unpredictable income, such as retirees
- People with a low credit score or a poor credit history who want to start building their credit score from the ground up
Features of a Credit Card against FD Online
Let’s take a look at the essential features of a credit card in comparison to FD:
- Rewards: Customers who use a credit card with FD can get cashback, reward points, and other benefits.
- Interest-free period: Almost all banks typically offer a 48- to 55-day interest-free period on secured credit cards.
- Credit limit: Banks often offer a total credit limit on the card of 75 percent to 85 percent of the fixed deposit amount.
- Reasonable FD amount: To apply for a secured credit card, banks give a predetermined deposit sum ranging from $10,000 to 25,000.
- Interest on FD: Cardholders can keep earning interest on their fixed deposits while using a credit card to pay for them.
- Minimal paperwork: Secured credit card applications do not require a lot of paperwork.
- Minimum tenure: The minimum duration of the FD against which the credit card would be applied is six months.
Benefits of Credit Card against Fixed Deposit (FD)
The following are some of the benefits of having a credit card against FD:
- No income proof required: There is no further income proof required to apply for a secured credit card because your fixed deposit serves as a security. This is advantageous for freelancers and stay-at-home moms.
- Helps to build a credit history: A past credit history is frequently required in order to obtain credit-related items. Having a secured credit card aids in the development of a positive credit history. Other forms of loans, such as personal loans, home loans, school loans, and so on, become easier to obtain as a result of this.
- Lower interest rates: Credit cards against FD have a lower interest rate than conventional unsecured credit cards since the FD placed with the bank might act as security.
Documents Required for a Credit Card against FD
- If you already have a fixed deposit with the bank, you will not be asked to submit any further proof proving your residence or identification. You can immediately apply for a secured credit card with FD. The identical proofs that you presented while opening the FD account are taken into account by the bank. They may, however, check the veracity of the aforementioned proofs, such as the proof of residence.
- If you’re starting a new FD account with the bank, you’ll need to provide proof of residency as well as proof of identity. After that, you’ll be able to apply for a secured credit card using your FD.
How to Apply for a Credit Card on FD?
- If you have an existing FD account, you can apply for a credit card on your FD at your nearest bank location. You can also do so by going to the bank’s website.
- If you don’t already have an FD account, you can open one at your nearest bank location. When you start an FD account with some banks, you may be given a free credit card. If not, you can apply for it by filling out an application form.