Top Reasons to Apply for a Credit Card Against Your FD

If you have a credit card can it can be similar a backup plan for financial emergencies. It helps you handle unexpected expenses and build your credit history. This simplifies future loan applications. To get a credit card, you must first meet certain eligibility criteria established by the card issuer.  

You may still be able to receive a credit card even if you don’t meet the eligibility criteria. This is accomplished by pledging your fixed deposits as collateral. Continue reading to learn more about the reasons for applying for a credit card with FD.

Credit Card Against FD – An Overview

Traditional credit cards may not be available to all. Especially those with a short credit history or low credit scores. Banks and financial institutions offer credit cards backed by fixed deposits to solve this problem. 

You can pledge your FD as collateral. This type of credit card is called as a secured credit card. It has different eligibility requirements. 

How Credit Card Against a Fixed Deposit can Help

A credit card backed by a fixed deposit offers several advantages. The following are the key advantages.

• A credit card on fd provides a chance to build or improve your credit score. Responsible use can improve your credit history. This is beneficial if your score is low or if you have no credit history.
• Credit card against a fixed deposit are easier to obtain. The fixed deposit as collateral reduces risk for the issuer. This makes them more likely to approve applicants with various credit profiles.
• Your credit limit is based on the amount of your fixed deposit. This guarantees a stable limit that matches your deposit. It helps you manage spending and helps you to avoid overspending.
• Both online and offline purchases accepts credit card against a fixed deposit. This includes shopping and paying bills.
• Many issuers provide tools to track and improve your credit score. This includes credit score monitoring and financial education resources. These tools helps to improve your credit score.
• Responsible use of a credit card against a fixed deposit may lead to the possibility of upgrading to an unsecured card. Banks might review your account and return your deposit if your creditworthiness improves.
• The credit limit tied to your deposit helps you stay within your budget and prevents excessive debt.
• It can act as a backup for unexpected expenses. Although repayment is necessary, having access to a credit card can offer peace of mind during financial emergencies.
• Credit card against a fixed deposit may offer standard benefits like cashback, discounts, or rewards, though they might not be as extensive as those on premium unsecured cards.
• Credit card against a fixed deposit typically have lower interest. This can save money if you carry a balance occasionally.
• Credit card against a fixed deposit often come with cashback offers and coupons for your purchases. In addition, most banks provide an interest-free period with these cards. This typically ranging from 48 to 55 days.

Eligibility for Credit Cards Against a Fixed Deposit

The eligibility criteria for credit cards backed by a fixed deposit can differ between banks and financial organizations. The following are some common requirements:

• Minimum Age : Applicants must generally be at least eighteen years old. Some banks may have a higher age requirement.
• Fixed Deposit Account : You need to open a fixed deposit account in the bank that you are applying for the credit card. The minimum deposit is usually smaller than that for normal credit cards.
• Credit History : Secured credit card on fd do not have stringent credit score requirements. They are often available to individuals with limited or poor credit histories or those seeking to build credit.
• Residential Status : You may need to be a resident of the country where you are applying for credit card against FD. Some banks may offer these cards to non-residents. But, the criteria can vary.
• Income Requirements : While these cards are generally more accessible, some banks might have minimum income requirements, especially for unsecured cards.
• KYC Documents: You will need to provide Know Your Customer (KYC) documents to apply for credit card against FD. 
• Bank Relationship : Having an existing relationship with the bank can be advantageous, though it’s not always required.
• Other Requirements : Based on the bank’s policies additional requirements or documents might be needed. It is the best choice to check with the specific bank for their exact eligibility criteria.

Final Thoughts

A secured credit card backed by your fixed deposit provides several benefits. Keep in your mind your fixed deposit acts as security for your credit card. If you ever fail to pay your credit card bills the bank can use your fixed deposit to cover the pending amount. 

Despite this, credit card on fd remain an excellent choice for individuals who have limited credit history. This also suits for non-salaried professionals.