Credit Card against Fixed Deposit(FD) offer lower interest rate as compared to other credit cards & are issued for those who have a low credit score. Find out the Banks offering Credit cards against Fixed Deposits.
Banks and financial institutions issue Credit cards against Fixed Deposits (FD). Such cards are called ‘secured’ as they are issued against an FD which acts as collateral. These cards are issued to people who have a low Credit score or are trying to build a Credit score from scratch. The Credit limit for a secured Credit card is usually a percentage of the FD balance. The FD acts as a security to the bank that issues the Credit card. A lien is marked on the FD until the Credit balance is settled. In case the cardholder defaults on payment, the FD is used to settle dues.
Why should you get a Credit card against Fixed Deposit
A secured Credit card is a great option for people who have low Credit score and are having difficulty getting a Credit card from the banks. So if banks denying you a, unsecured Credit card based on your poor Credit score, you can apply for a secured card and get it easily.
The secured cards are also ideal for beginners who want to make sure their Credit score is maintained well. If you are a homemaker or do not have a fixed monthly income or don’t have an income proof, you can still get a secured Credit card against your Fixed Deposit.
Apart from offering the same benefits as that of an unsecured Credit card, cards issued against Fixed Deposit have slightly lower interest rate.
Features of Credit cards against Fixed Deposits
Credit cards against Fixed Deposits have the same features as that of the unsecured cards, and may have very slight variations. The Credit limit of a card issued against an FD is usually a percentage of the FD amount (up to 85 per cent). The approval process is fast, uncomplicated and straightforward. There is no need to show an income proof to get a Credit card. Moreover, the interest rate on Credit cards against Fixed Deposits is much lower than that of other unsecured Credit cards. In case you default on the Credit and are unable to pay the dues, the bank can settle your dues from the Fixed Deposit.
Benefits of Credit cards against Fixed Deposits
One of the greatest advantages of a Credit card against Fixed Deposits is that it can be issued to anyone having bad Credit score. Usually banks check for the customer’s Credit scores before issuing a Credit card or accepting applications for loans.
These cards are not only easier to access but also help improve damaged Credit scores. Upon getting this Credit card, the cardholder gets a fresh start and chance at redeeming the Credit score by paying up dues on time.
Another benefit of these Credit cards is that they offer lower interest rate compared to other Credit cards in the market, sometimes even half the rate of other cards. This makes sure that your dues don’t pile up to become a huge financial burden.
How to avail a Credit card against Fixed Deposits
It is very easy to avail a Credit card against a Fixed Deposit. If you already have an existing Fixed Deposit in a bank, you can visit the nearest bank of your branch and apply for a Credit card against the FD. You will need to submit an identity proof and no income proof is required.
If you don’t already have an FD account, you visit the nearest branch of your preferred bank and get an account opened. At the same time you can fill in the application for a Credit card against your FD. Remember, the higher your FD amount, the higher is your Credit limit.
Banks offering Credit cards against Fixed Deposits
Most public and private sector banks offer Credit cards against Fixed Deposits. The features of these cards vary from one another. The minimum amount against which a Credit card can be issued also varies from one bank to another. Following is a compilation of some of the cards offered by banks. This is not an exhaustive list. You can visit the website of the bank of your choice to find out more about such cards.
SBI Advantage Plus Credit card:
With this card in hand, you can avail Credit cash withdrawal across the world. The bank allows up to 100 per cent of cash withdrawal limit. An FD is opened in your name for the amount fixed. The FD will have a lien in favour of SBI cards. You can also get add-on cards for your family members on the same account. One key feature of this Credit card is that it allows you to transfer the outstanding amount of any other Credit card this card to avail lower interest. An annual fee of Rs500 will be charged.
ICICI Bank Coral Credit Card Against Fixed Deposit:
You can open an FD with a minimum of Rs20,000 and get a Coral Credit Card against your FD. The minimum tenure of the FD has to be 180 days. You have to pay a joining fee of Rs500 and thereafter an annual fee of Rs500 from the second year. You will be entitled to earn payback points on your purchases. There are several offers on BookMyShow, airport lounge privilege and savings on fuel purchases.
ICICI Bank Platinum Credit Card:
You can get this card by opening an FD worth a minimum of Rs20,000. The application process is similar to the Coral Card with the only difference being that a Platinum Card is issued instantly. So, if you walk into your nearest ICICI Bank and open an FD account, you can walk out with a Credit card in hand. The features and benefits include a low rate of interest and savings on dining as well as fuel. As an added bonus, there is no annual or joining fee.
YES Prosperity Rewards Plus Credit Card:
Yes Bank offers a Credit card against an FD of a minimum of Rs50,000. You earn accelerated rewards, joining benefits. A membership fee of Rs350 is charged ujpon joining and thereafter an annual fee of Rs350 is charged. The bank has a tie-up with several merchants and companies for groceries, gadgets, apparel as well as travel tickets. As a Credit cardholder, you will get discounts and easy EMI options at these merchants.
YES FIRST Preferred Credit Card:
This is a premium Credit card offered by Yes Bank iin select cities. The card is issued to individuals with a minimum net salary of Rs2 lakh per month or an Income Tax Return of Rs24 Lakh and above. The Preferred Card is available against a Fixed Deposit of Rs3 lakh and above.
Axis Bank Insta Easy Credit Card:
You can get an Insta Easy Credit Card against an FD of a minimum of Rs20,000 and a maximum of Rs25 lakh. You can choose the Credit limit of your Credit card. The bank allows the Credit limit of up to 80 per cent of the FD amount. Cash withdrawals of up to 100 per cent of the Credit limit are allowed. There is a 50-day Credit free period and there are no joining or annual fee charged on the card.
How does a Credit card against FD help improve Credit score?
A Credit card against FD is especially beneficial for someone with a bad Credit score. If you have a poor Credit score and are getting rejected for loans or Credit cards, this card is for you. Many banks allow you to transfer your outstanding from any other bank to a Credit card against FD. The rate of interest for Credit cards against FD is lower. Once you get the card, you can start making timely payments and hence, improve your Credit score.
What are the documents required to get a Credit card against FD?
For a Credit card against FD, you don’t need any income proof. All you need is a proof of identity which can be in the form of a voter ID, passport, Pan card or Aadhaar card.
When should I get a Credit card against FD?
A Credit card against FD is ideal for people who have bad Credit score as well as for beginners. It is also ideal for people who do not have an income proof. You can also get a Credit card if you have an existing FD in a bank. If you want to build your Credit score from scratch, you can do so by getting a Credit card against FD.