Faster onboarding processes make applying for a credit card online easier. Digital transactions and contactless payments have also accelerated their growth in India. While regular credit cards are the new normal, you can also get an FD credit card.
If you are facing difficulty applying for a regular credit card because of income or credit score parameters, a credit card backed by a fixed deposit is a great alternative. All it takes to get an FD credit card is to book a deposit and apply online. Create an FD account with the same bank that will issue the credit card or in the partner bank of the issuing agency.
With this card, you can enjoy numerous credit card offers and earn attractive interest on your FD. This card may be a better alternative for you for a variety of reasons.
Who Can Apply?
Anyone, like a freshly minted professional or even a student, can apply for this credit card. It is a great tool for those without a credit history. As you build your credit profile, you can also enjoy offers and rewards on your transactions.
How Does A Credit Card Against FD Work?
As the name suggests, this credit card is issued against a certain amount you transfer to your FD account as collateral for your credit card. This reduces the risk of defaulting, and you enjoy the benefits of a credit card even if you have irregular income.
You will continue to earn interest on your fixed deposit as it matures. If you fail to pay your dues, the pending amount gets deducted from your FD.
Features Of Credit Cards Against Fixed Deposits
Linking your investment with your credit card allows you to avail of two benefits: interest income and the opportunity to build your credit score. Here are some characteristics of this type of card.
- Affordable Investment: You can invest in an FD that starts from just ₹5,000
- Minimum Tenure: Usually, banks require you to book your deposit for at least six months
- Rewards: These cards offer reward points, cashback and discounts based on the bank and variant
- Interest-free Period: Banks usually offer an interest-free period of 48 to 55 days on such cards
Merits of a Credit Card Backed By an FD
Here is how you can make the most of such cards to boost your financial health and credit standing.
- Build Credit Score
Exhibiting responsible credit utilisation and timely payments can help you build a healthy credit score. This sets you up for the future, making you eligible for a regular credit card.
- Low Interest Rates and Disciplined Returns
These secured cards have lower interest rates than regular credit cards. This helps you pay more affordably in case you have an overdue balance.
At the same time, this card prevents you from accessing your FD funds prematurely, therefore ensuring a continued investment. This helps you get good returns on your investment.
- Easy Approval And Minimal Documentation
You don’t need additional documents to prove your identification or residence, as you are already registered with the bank when creating an FD. You can apply for an FD credit card right away. Both online and offline application procedures are straightforward.
- Withdrawal And Credit Card Limit
The card will expire when your FD matures. You must set up a new fixed deposit account and link the card to it, or apply for regular credit. You can also renew your investment to continue enjoying the benefits of such a card.
Banks will decide the credit card limit according to the value of your fixed deposit. The credit limit for such cards usually ranges between 80% and 90% of the FD amount.
How To Make The Most Of This Card
There are two things you should remember when utilising this card.
- Make Timely Payments: Paying your dues on time is essential to avoid paying interest or disrupting your FD. This also helps you build a better score.
- Maintain a Low Utilisation Ration: Use < 30% of your credit limit to boost your score. This showcases that you are not dependent on credit.
While an FD credit card gives you fewer offers and rewards as compared to a regular one, choose it to build a healthy credit history over time. While there are many secured cards in the financial marketplace, choose the FD-backed One Credit Card to enjoy great offers while building your credit score.
Get it now to enjoy 5X rewards on your top 2 spending categories each month and save with offers on dining, entertainment, shopping, travel, education and fuel. Check your transactions and easily manage your finances on the powerful One Credit Card App. Follow the easy digital steps to get the One Credit Card backed by FD and swipe like a pro. Apply now to get started.
