A Credit Card against FD, or a ‘secure’ Credit Card, is an essential financial tool for individuals who want to take advantage of Credit Card benefits while keeping their FD as collateral. This is particularly helpful to people with low credit scores or no proof of income.
In this blog, we will examine the benefits of applying for a Credit Card against an FD in greater depth.
What is a Credit Card Against FD?
A Credit Card against FD, also known as a ‘secure’ Credit Card, allows people to secure Credit Cards by keeping their FD as collateral. It is a handy tool for people who want to improve their credit score to have a better chance at acquiring a loan from their respective banks. With a Credit Card against FD, people can enjoy the benefits of a Credit Card without having to lose out on the interest on their FD.
Key benefits of Credit Cards Against FD
1. Easy approval
The approval process for a Credit Card against FD is easy since you are keeping your Fixed Deposit as collateral. Under such circumstances, the process is generally fast as it involves less paperwork and fewer background checks regarding your credit history.
2. No need for high credit scores
A poor credit history can severely impact your chances of getting a Credit Card. When you apply for a Credit Card against FD, the collateral element negates the significance of your credit score. This is a great benefit for people who are looking to improve or build a credit score.
3. Secure way to build credit history
A Credit Card against FD is a secure way to build or rebuild your credit score. Through timely payments of bills, avoiding defaults and keeping the credit utilisation level below 30%, you can work towards earning a good credit score. This will help you get you a higher chance of loan approvals.
4. Flexible credit limit
These Credit Cards have a very flexible credit limit, and card owners can spend 75% to 90% of their Credit Card limit. The percentage varies depending on the value of your FD. This keeps your spending on a check while keeping your funds secure.
5. No impact on FD interest earnings
A significant advantage of opting for a Credit Card against FD is that your Fixed Deposit continues to earn interest, and deposits remain untouched as you keep enjoying the benefits of holding a Credit Card.
6. Lower interest rates
A secured Credit Card has lower interest rates than an unsecured one. The involvement of collateral makes all the difference here. This makes it a very cost-effective choice for getting a Credit Card.
7. Access to rewards and other benefits
When you get a Credit Card against FD, you are entitled to all the benefits of an unsecured Credit Card. This applies to rewards, cashback, and other perks.
Eligibility and documents criteria for Credit Card Against FD
Before you hit the Credit Card apply button on your bank app or website, make sure you are eligible on the following grounds:
- Must be a citizen of India or an NRI with a valid residential address.
- Must be 18 years or above.
- Should have a Fixed Deposit with the respective bank.
- The FD should have a minimum deposit amount of ₹15,000 and should be of 1 year at least (depending on the bank’s policy).
- Should comply with the KYC rules of the bank.
Documents Required
- Adhaar or PAN card for ID proof.
- Adhaar, PAN or driving license is required for proof of address.
- Fixed Deposit Receipt(FDR) issued by bank.
Conclusion
A Credit Card against FD is a smart financial tool for individuals with low credit scores and no credit history. If you’re looking for a hassle-free Credit Card option, then hit the secured Credit Card apply button to enjoy the benefits.
