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The Ultimate Guide to understanding the credit card against FD

Credit cards against fixed deposits, recognized as Secured Credit Cards, are a great choice for people with no credit history or a low CIBIL score.

While obtaining a standard credit card necessitates a consistent monthly salary, a good credit score, and other factors, obtaining a secured credit card or credit card against FD only necessitates a minimum fixed deposit with the bank.

To apply for a secured credit card, each bank has a minimum fixed deposit amount. The total credit limit on your credit card is directly proportional to the balance in your FD account. This means that the higher your FD number, the higher your credit card limit will be. 

The credit card limit is usually set at 75 percent to 85 percent of the FD number. Furthermore, you must have a minimum of Rs. 15,000 to Rs. 20,000 to be eligible for this credit card.

How do I get a credit card with a fixed deposit?

To be eligible for this credit card, you must have a fixed deposit of at least Rs. 15,000 and a maximum of Rs. 25,000. The minimum amount required on a fixed deposit for a secured credit card varies by bank. A few banks may issue cards for fixed deposits as low as Rs.10,000, while others may require you to make a fixed deposit of Rs.25,000 or more.

 You may apply for a credit card either online or in-person at the credit card issuer’s branch. If you want to apply for a loan online, you can do so directly on the lender’s website or via third-party financial platforms that have partnered with the lenders.

On your credit card against FD, you’ll be given a credit limit of up to 85 percent of the principal amount of your fixed deposit.

Benefits of a credit card against fixed deposit

When you apply for any credit card bank asks you to submit lots of documents as proof of your credit fitness. But in the case of a Secured credit card, since the lender has the benefit of your protection, the procedure is relatively easy. The following are some of the benefits of using a credit card to pay off a fixed deposit.

  • As it is a secured credit card, you would not be required to request a large number of documents for the card to be accepted. Owing to the benefit of the deposit, the lender may not require you to refer to income records.
  • A bad credit score will make it difficult to obtain a standard credit card. A credit card secured by a fixed deposit, in contrast, is easily accepted for such people. If you have a low credit score, you can apply for this credit card and improve your credit score by paying your credit card bills on time.
  • Only when you have a higher salary do you get a higher credit limit on an unsecured credit card. However, even if your monthly income is low, you can get a credit card with a higher credit limit with the aid of a fixed deposit with this card.
  • Credit card applications from places on lenders’ blacklists are unlikely to be accepted. Despite these disadvantages, a credit card secured by a fixed deposit may be approved quickly.
  • A secured credit card’s interest-free duration is usually longer than that of other credit cards. It lasts anywhere from 48 to 55 days.

Though this type of credit card gets approved quickly without much hassle, still you may face some drawbacks as well. If you fail to reimburse the dues or credit card annual fees then the concerned authority has the right to take possession of your fixed deposit to cover the amount used on your card.

 A secured credit card’s grace period is usually longer than that of other credit cards. It lasts anywhere from 48 to 55 days. To get this secured credit card against FD, you’ll have to pay an application fee and a processing fee along with your fixed deposit and credit card annual fees. The cost of maintaining the card can increase thanks to this.

A discussion about credit cards is unjustified without appreciating the Bajaj Finserv RBL Bank SuperCard. The card is one of the most versatile options in the market and offers numerous reward points and cashback for every transaction made using it. Not just that; it also allows the cardholders to withdraw interest-free cash from the ATM machine for up to 50 days.

Zaraki Kenpachi