Credit card against fixed deposit: How can it be beneficial for you? 

As we all know, big-ticket loans like education loan and home loan need a good credit score. Credit cards can help build a good credit history but can land the cardholder in large debt if he/she doesn’t use it wisely ultimately spoiling his credit score.

However, you can continue your credit card purchases and improve your credit score through a new credit card against your fixed deposits.

What is a credit card against FD?

A credit card against a Fixed Deposit is like borrowing your own money where FD acts as a security or collateral and banks and Non- Banking Financial Institutions (NBFC) provide a credit card against money deposited in your Fixed Deposit account. It is also known as a secured credit card.

If the cardholder misses the monthly payment, the bank can redeem the linked FD to recover the amount. Also, you do not need a good credit history to apply for these cards.

The credit limit of these cards is determined by the amount deposited in your FD account and varies from bank to bank. You may get 80-90% of the FD amount as your credit limit.

Advantages of credit card against FD

– This is a very lucrative deal for those whose with poor credit scores and opportunities to improve their credit score.

– It does not require paperwork.

– FD credit cards are offered the same rewards and cashback as unsecured credit cards.

– You can choose the credit limit of your choice with limits to FDs.

– There is no additional charge. Additionally, interest on FD is paid as earlier.

– Interest rate seems to be lower than other credit cards.

Banks providing this facility

These credit cards are provided by almost all major banks on the basis of your fixed deposit. These include banks like SBI, ICICI Bank, Axis Bank, Union Bank, Bank of Baroda, DCB Bank, Kotak Mahindra. Even if your fixed deposit is not in these banks, there is no need to worry, you can find out about this facility from your bank.

Process to get the credit card

To get a credit card on the basis of your fixed deposit, you don’t have to go around the bank or do any paperwork. You can get it from your mobile banking app. For example, if your fixed deposit is in ICICI Bank, then go to its app iMobile and follow the process by clicking on the credit card on FD. Your credit card will be approved in just 5 minutes.