A credit card gives you financial flexibility to manage planned and unplanned expenses on a daily basis. However, if you don’t have a good credit score or a fixed income, it can be difficult to qualify for a regular credit card. But there’s another great option you can use in such cases. Getting a FD-backed credit card allows you to use the deposit amount as your credit limit and also gives interest on the investment.
This fixed deposit credit card gives you access to instant credit as well as a range of offers that can make transacting more affordable.
Who Should Get A Secured Credit Card?
A secured credit card is ideal for anyone who cannot pass a regular credit card eligibility check. If you are new to credit or just beginning your career, you may not have a credit score. Since lenders want to reduce their credit risk, they do not offer cards to those who are not creditworthy.
However, with an FD-backed credit card, you can get a credit limit based on the value of your investment. This card is also apt for those who do not have a regular source of income or a high salary. It is also ideal if your credit score has suffered a hit due to a recent default. Additionally, if you do not have income proof that credit card companies normally expect, you can benefit from this type of card.
Why To Get A Fixed Deposit Credit Card
There are many advantages of signing up for this credit card, and here’s an overview:
Instant Approval And Minimal Paperwork
Getting an FD credit card is much easier and faster, as credit card companies use your fixed deposit as collateral. All you need to do is book an FD to get a secured credit card, using it as collateral. This allows you to enjoy the benefits of using a credit card as soon as possible.
Since financial institutions have the FD to rely on, they also do not require you to submit much paperwork. This helps you apply instantly and without hassle.
Ways To Improve Creditworthiness
By using a secured card, you can build your credit history. Make sure to spend judiciously and pay your bills on time to boost your credit score. By keeping your credit utilisation ratio less than 30-40%, you can further enhance your score.
In six months to a year, you can see an improved score. Once your score is good enough, you can apply for loans and regular credit cards. Thus, a fixed deposit credit card helps you strengthen your financial future.
FD Continues To Reap Interest Gains
You get to earn interest on your FD while you use your FD-backed credit card. This helps you build wealth while you swipe and transact with your card. In addition, most issuers don’t require you to have a massive investment. With an FD of just Rs.5,000-10,000, you can become a credit cardholder. Please note that you cannot prematurely withdraw your FD or close the account while you have a secured card.
More Affordable Fees And Charges
Credit card companies normally charge nominal interest on overdue amounts on such cards. Moreover, the other credit card fees, such as joining charges, annual fees and more, are also lower. This helps you reduce your costs as you begin your journey with credit.
Access Rewards And Perks
Secured credit cards also offer you reward points and discounts on dining, food delivery, and more. You can use them to save more as you pay for everyday essentials and big-ticket purchases. Facilities like EMI conversion also help you split payments with ease.
Some FD-backed credit cards also offer insurance covers, like personal accident cover, as a complementary benefit.
More Control Over Credit Limit
Usually, your credit limit is decided by issuers based on your earnings and credit score. A secured credit card works differently. Your FD’s value determines your credit card. Today, you can get 70% to 100% of your fixed deposit’s value as a credit limit.
This allows you to plan your credit limit on your terms based on your spending needs and repayment capacity.
How To Choose The Right Secured Credit Card
Factors to keep in mind when selecting the ideal card include those related to your investment and the specific card you choose. These include:
Interest rate offered on your FD investment
Minimum tenure of your FD
Minimum value of FD investment
Criteria for partial withdrawals of your FD
Interest rate and interest-free period
Cashback and other offers
Annual and joining fees
Reward points expiration and redemption
Excited about signing up for an FD-backed credit card? Keeping the pointers listed above in mind, you can make an informed choice. A smart option to consider is the One Credit Card, backed by an FD. By creating an FD starting from Rs. 5,000 to Rs. 1 lakh, you can get this premium metal credit card.
Not only does it offer you a credit limit that is 100% of your FD amount, but it also gives you access to the powerful OneCard App. Use it to track payments, set limits, and check offers instantly. You can also enjoy 5X reward points and a high interest rate on your FD with this credit card. Apply online now to discover all its other perks!
