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Monday, March 4, 2024

FD Credit Card: All You Need to Know to Get Maximum Benefits

 If you are new to credit or have a credit score that’s less than ideal, getting a credit card can sometimes be a hassle. Stringent credit card eligibility terms may keep young professionals from qualifying, but that’s where an FD credit card comes into play. 

It enables easy credit card access to individuals who don’t qualify for a traditional credit card due to a low or no credit score. No wonder then that these cards have become popular and are now as easily available as regular credit cards.

FD Credit Card: What is it and How Does it Work?

An FD credit card is a secured card you can get by putting up your fixed deposit as collateral with the issuer. It works in a way that is similar to an unsecured credit card. You get to spend up to a set limit, earning rewards and other benefits with every payment. At the end of the billing cycle, you can repay the utilised limit as per the bill. Additionally, you also earn an interest on your FD amount.

However, the assigned credit limit depends on the FD value, not your financial profile. If you fail to pay your credit card bill, the issuer can recover the same by liquidating your deposit. Like a regular credit card, non-payment will also impact your credit score, which, in turn, will affect your access to credit in the future. 

Who Should Get a Credit Card Against FD?

Apply for a new credit card against FD under the following circumstances:

  • You don’t meet the income requirements of the issuer
  • You don’t have the income proof required by the issuer
  • You don’t have the credit score required by the issuer
  • You don’t have a stable income as required by the issuer

Features and Benefits of Credit Cards Against Fixed Deposit

Here are some key advantages of an FD credit card:

Easy Accessibility

Secured credit cards are relatively easy to get because the risk for the issuer is lowered with a fixed deposit that acts as security. This makes issuers less hesitant in approving applications. 

FD-Linked Limit

When you apply for a new credit card against your deposit, the limit depends on the value of your fixed deposit. This gives you better control over your limit as you can pledge a high-value deposit if you need a higher limit and vice versa. 

Generally, issuers offer a credit limit of 75% - 80% of your deposit. However, some, like the One Credit Card, offer you 100% of your FD’s value as your credit limit. 

Competitive Interest Rates

Credit card issuers levy an interest rate, which is applicable in case of non-payment and other stipulated instances. In unsecured cards, the rate is higher because the risk is higher. However, since FDs lower the risk in secured cards, the rates are comparatively lower.

Builds Credit Score

With an FD credit card, you can break out of the cycle of not getting credit because of no credit experience. By using your card responsibly and paying your bills on time, you can finally build your credit score. This places you in a position to get affordable credit in the future. 

Offers Rewards and Interest Earnings

Secured credit cards also come with exclusive rewards programs that allow you to earn points for all or select transactions. Use them to get a discount, make payments or redeem them for products and air miles. 

Additionally, the FD you invest in gives you interest payouts. This means you can build your wealth while getting access to a credit card! 

Convenience of Paperwork & Choosing FD Tenors

Issuers offer an FD credit card with minimal documents since they have your deposit as security. As such, they require only basic ID and address proof. 

Moreover, most issuers require you to have an FD with a tenor of just 6 months to a year. This gives you faster access to liquidity. 

How to Get The Most Out Of a Secured Credit Card

FD credit cards are based on you booking a fixed deposit that earns interest until maturity, just like a regular FD. Additionally, these cards offer reward points and deals when you use them to shop or make payments. Here’s how you can maximise the benefits:

  • Choose an issuer that offers high FD rates and a lucrative rewards program
  • Select the right tenor to get high returns from FD
  • Use credit cards for transactions that offer the most rewards
  • Redeem points as per the issuer’s terms to save more
  • Pay bills on time to enjoy continued benefits and returns

FD credit cards are a great way to get access to instant credit and build your score. The One Credit Card + FD Combo is one option you can rely on to get exclusive perks and benefits. Along with an entirely digital application process, you can enjoy 5x rewards on top two spending categories, pay zero annual or joining fees, convert big bills to EMIs, and more. Apply for a new credit card backed by a fixed deposit today!

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