If you're looking for a way to get a credit card against FD, you're in the right place. This method can open doors for financial flexibility without the traditional credit score barriers. Securing a credit card against a fixed deposit (FD) is a simple process that offers several advantages while allowing you to leverage your savings wisely. Whether you're new to credit or looking to build your credit score, this option offers the best of both worlds.
What is a Credit Card Against FD?
A credit card against FD is a secured credit card issued against your fixed deposit. Essentially, the bank uses your FD as collateral to provide you with a credit limit, often up to 85%-90% of the deposit value. Unlike traditional credit cards that rely on your income and credit history, this option is ideal if you're looking for easy approval without stringent eligibility criteria.
Why Consider a Credit Card Against FD?
Opting for a credit card against FD can be beneficial for several reasons:
- Easy Approval: If you’ve ever faced rejection due to a low credit score or lack of credit history, this method bypasses those barriers. Your FD serves as security, reducing the risk for the lender, which in turn increases the likelihood of approval.
- Building or Improving Credit Score: A credit card against FD is a smart way to build or improve your credit score. Since it functions like a regular credit card, your transactions and repayment history are reported to credit bureaus. Timely payments will have a positive impact on your credit score.
- Attractive Interest Rates: With a secured credit card against FD, the interest rates are usually lower than those on unsecured credit cards. This means if you do need to carry a balance, you won’t be burdened with extremely high interest charges.
- No Income Proof Required: Since the card is secured by your FD, you don’t need to submit income documents or meet a minimum income threshold. This makes it an excellent option for students, homemakers, or anyone who does not have a regular income source.
Features of a Credit Card Against FD
Here are the notable features of getting a credit card against FD:
- Fixed Deposit as Collateral: Your FD acts as the security for your credit card. This means that if you maintain your deposit, you can enjoy the benefits of a credit card.
- Credit Limit: The credit limit is usually a percentage of your fixed deposit amount. Typically, this ranges between 80% to 90% of the FD value, giving you access to a substantial credit line while your savings continue to earn interest.
- Minimal Documentation: Since you're providing collateral in the form of an FD, the documentation process is simpler and hassle-free. All you need are basic identification documents, and your FD is used as security.
- Lower Fees and Interest: Compared to unsecured credit cards, the fees and interest rates for a credit card against FD tend to be lower. This makes it a more cost-effective option for managing your finances.
- No Risk to Your FD: While the FD is pledged as security, it remains untouched as long as you manage your credit card responsibly. You’ll continue to earn interest on your deposit without worrying about penalties, unless you default on your credit card payments.
Advantages of a Credit Card Against FD
- Credit Limit Tailored to Your Deposit: The size of your credit limit is directly linked to your fixed deposit. This gives you control over how much credit you can access, depending on the amount of your FD. If you want a higher credit limit, simply increase the size of your FD.
- No Impact on FD Earnings: A key advantage of securing a credit card through an FD is that your deposit remains intact and continues to earn interest. Even though your FD is pledged, the returns on it are not impacted, ensuring your savings continue to grow.
- Safer Alternative for First-time Users: If you're new to using credit cards, a credit card against FD offers a safe entry point. It helps you learn how to manage your credit and payments without the fear of accumulating debt, as your FD provides a safety net.
- Instant Issuance: Since your FD provides the collateral, banks often issue the credit card instantly or within a short period of applying. This quick approval process is particularly useful when you need immediate access to credit.
How to Get a Credit Card Against FD
The process to get a credit card against FD is quite straightforward:
- Open an FD: If you don’t already have one, open a fixed deposit with a bank offering this facility. Make sure the FD is of a value that aligns with your desired credit limit.
- Apply for the Card: Request a credit card against FD through your bank’s online or offline application process. You will need to pledge your FD as security.
- Approval and Setup: Once approved, your credit card will be issued with a credit limit based on the value of your FD. You can then begin using it just like any other credit card.
Conclusion
A credit card against FD is a great option if you're looking to build credit or need a credit line without the hassle of a traditional application process. It offers a convenient, secure, and low-risk way to access credit while ensuring your savings continue to work for you. Plus, with the added flexibility of minimal documentation and no income requirements, this type of credit card is ideal for a wide range of users, from first timers to those looking to rebuild their credit.
