Many people believe that getting a Credit Card is tough, especially if they have a low credit score or no credit history at all. But there is one easy way to get hold of it without bothering about credit scores, i.e., apply for a Credit Card against Fixed Deposits. This becomes a good option for people who wish to enjoy the benefits of holding credit when it is backed by their savings.
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What is a Credit Card against Fixed Deposit?
A Credit Card against a Fixed Deposit is a kind of secured Credit Card offered to you against a Fixed Deposit (FD) that you open with the bank. Rather than checking your credit history, a Credit Card is offered by the bank with your Fixed Deposit kept as security. Even those who do not have any prior experience with credit or have a low credit score can easily avail themselves of a Credit Card.
How does it work?
- The bank provides a Credit Card but has a credit limit that is up to 80% to 90% of the Credit Card against a Fixed Deposit.
- Your FD is still intact and earns interest when you use the Credit Card for purchases.
- Failure to clear the credit bill in time would result in the repayment amount being taken from the Fixed Deposit amount.
Hidden benefits you should know
While many people may think that a Credit Card against Fixed Deposit is meant only for people who cannot get a normal Credit Card, it has its advantages, which even normal Credit Cards may not provide.
1. Simple approval process
Since the Fixed Deposit will serve as collateral for the Credit Card, the verification process is fast and simple. There will be no requirement to prove income, nor will there be any Credit Score checks.
2. Boosts your credit score
Responsible use of the card with on-time payments will improve your credit score, which translates to getting better loan offers in the future.
3. Lower interest
A Credit Card linked to a Fixed Deposit usually charges lower interest compared to a normal Credit Card. Therefore, this option proves advantageous in case of Credit Requirements.
4. Continued earnings from Fixed Deposit
It is used as a security instrument for your FD, but it will continue to compound on interest. It essentially allows your savings to earn interest while you enjoy a Credit Card.
5. No salary proof needed
While normal Credit Cards demand salary slips and several other documents to get benefits, anyone can apply under this section, even students and pensioners.
6. Same features as the regular Credit Card
With this Credit Card, you can avail yourself of many features like Reward Points, Cashback Offers, and Discount Services while shopping, dining, traveling, etc.
Things to Keep in Mind
A Credit Card against Fixed Deposit is one good way to go about it, but here are few points to keep in mind:
- Your credit limit will be determined according to your FD amount.
- In case of unpaid bills, the amount may be deducted from your FD by the bank.
- It is imperative to use the card correctly for a good credit score.
Final Thoughts
A Credit Card against Fixed Deposit is a great way to enjoy all the advantages of the card without worrying about credit scores or income-proof requirements. It provides financial flexibility while ensuring that your savings remain intact. Visit your bank today and take a step toward your financial independence!
