Availing of an instant credit card against FD is a smart way to get a card for most people. This option is especially beneficial if you aren’t eligible to apply for a regular credit card due to a low credit score.
FD-backed credit cards, also called secured credit cards, are similar to unsecured credit cards in many ways. However, there is a difference but you can still use one to make online and offline transactions.
Here is a quick overview of these cards and their benefits.
Credit Card Against FD: An Overview
An instant credit card against an FD is an instrument that requires collateral. Here, issuers assign the credit limit based on your fixed deposit’s value. Generally, issuers inspect your creditworthiness with a credit score check. However, if you are new to credit, you may not have a score that makes the cut.
So, with your FD as security, these issuers offer a credit card with the appropriate terms. This reduces the risk for issuers and allows them to provide credit services. As mentioned, the maximum limit that you get depends on the FD’s value. Typically, issuers offer between 75% and 100% of your FD amount as your credit limit.
Advantages of Credit Card against Fixed Deposit
All credit cards against FD have a few benefits, which are as follows.
No Income Proof Required
The key benefit of getting a secured credit card is that you can apply without any proof of income. This allows college students, freelance workers, and homemakers to obtain a credit card without any hassle.
Builds Credit History
This card is ideal for those who want to build their credit history and score. It helps establish a credit history, and all you need to do is pay the bill on time. After a few months of proper usage, your credit score will improve. At that point, you may even qualify for an unsecured credit card.
Lower Interest Rates
Since this is a collateral-backed card, issuers can offer you a lower interest rate. As such, it is a more cost-effective option compared to an unsecured credit card. This way, if you miss your due amount, a smaller interest may apply to your outstanding amount.
Besides the interest rate, the other administrative charges applicable are often lower as well. This is particularly noteworthy for students looking to get their first credit card, as it keeps costs low.
Many Rewards
When it comes to perks, these cards share similarities with some of the best rewards credit cards in India. In fact, the rewards suite is often identical to those offered on an unsecured variant. This includes discounts, cashback, waivers, special offers, and more. You also earn reward points on your purchases, which you can then redeem.
However, there may be some minor differences, with some perks being exclusive to the unsecured cards. To avoid confusion, check these terms before you apply for the card.
Interest-Free Period
Also known as the grace period, this is the period when you can pay your credit card bill without paying any interest. This is a common benefit with credit cards and you should look for an issuer that has an adequate grace period. It helps ensure that you have enough time to clear your dues, and without incurring any additional costs.
Earn Interest
A notable upside of a secured credit card is that your fixed deposit will continue to earn interest as long as you hold the card. You don’t have to liquidate the FD or worry about prematurely withdrawing it. The FD grows in the background at the set rate, while you use the card.
How to Apply for a Secured Credit Card
Here are the steps you can follow on most issuers’ websites to apply for a secured credit card.
- Step 1: Visit the issuer’s official website
- Step 2: Check their eligibility criteria, terms, conditions and other details
- Step 3: Fill the application form with personal and financial details
- Step 4: Submit the application and wait for approval
- Step 5: Make the deposit to open a FD account and get your credit card instantly
Issuers may have a different process, and some may even allow you to submit an FD certificate when applying.
Following the steps, you can easily apply on most issuers’ websites. It is always better to check the eligibility and other requirements before proceeding. If you need an instant credit card against an FD, opt for the One Credit Card.
With OneCard’s FD + credit card combo, you get a plethora of benefits to make your credit card experience simplified. This includes, 5X reward points on your top two categories, cashback, discounts and other offers. Plus, you can easily manage your spends and track your expenses on the One Credit Card app. Apply online to get started.
