How can I avail a Credit Card against FD?

How can I avail a Credit Card against FD?

With rising consumption and purchasing power, the need for credit cards has skyrocketed in recent years. Credit cards can be very useful to cardholders. Depending on the limit of the credit card you hold, your purchasing power may be increased by several lakhs of rupees. The convenience of buying now and paying later can also help you maintain and upgrade your lifestyle without any immediate and significant financial burden.

The limit on your credit card typically depends on the level of your income. That said, income is not the only criteria used to determine the limit of credit you are eligible for. In fact, you can also avail a credit card against FDs (fixed deposits).

But what is a credit card and how can you avail one against FD? Let’s get into the details.

What is a Credit Card against FD?

A credit card against FD is a kind of secured credit card that is issued using the amount in your fixed deposit as the security. The main criteria or prerequisite for availing a credit card against FDs is that you should have a specified minimum sum of money invested in a fixed deposit. Today, many banks and credit card issuers offer CCs based on the amount invested in the FD.

Typically, the limit on the credit card against FD is set at 75% to 90% of the amount in the fixed deposit. So, for example, if you have invested Rs. 10 lakhs in an FD, your credit card against FD may have a credit limit ranging from Rs. 7.5 lakhs to Rs. 9 lakhs.

Since this is a secured credit card, in case you miss making a payment on the due date, the bank or the credit card issuer can redeem the amount due from the FD linked to the card. Additionally, since the credit card is backed by the fixed deposit, the fees associated with this kind of a credit card are typically lower than the costs associated with unsecured credit cards.

How to avail CC against FD?

If you already have a fixed deposit with the bank from which you wish to receive a secured credit card, you can directly apply for the card by filling out the application form on the bank’s website.

On the other hand, if you do not have an FD yet, you need to first open a fixed deposit with the bank. Hence, it’s imperative to visit the nearest bank branch to open your FD account first followed by the credit card account.

When you open an FD with the bank, you may find that in some cases, a complementary credit card against FD may already be issued. If this is not the case, you will have to apply for a secured credit card separately, via the bank’s website, by downloading and filling up the application form for the card.

Conclusion

See how easy it is to avail a credit card against FD? The other benefit of this is that you can enjoy lower fees and charges on your secured credit card, and get limits that are significantly high, depending on the amount in your fixed deposit.

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