All You Need to Know About Credit Card Against Fixed Deposit

Credit Card Against FD

Credit cards provided by lending institutions are generally of two types – secured and unsecured. An unsecured credit card does not have a collateral backing. On the other hand, secured credit cards are sanctioned against a fixed deposit.

Credit cards against FD are an ideal option for those who don’t meet the eligibility criteria to avail a standard one.

5 comprehensive facts about secured credit cards

  • Credit limit: Lenders issue secured credit cards against FD. The credit limit offered on these cards depends on the value of fixed deposits. Reputed lenders offer a limit of 75% to 85% on the value of fixed deposits held. Higher the value of the FD, higher is the credit limit. You can also learn tips to increase your credit card limit to be able to spend more.
  • Convenient availing process: Generally, when you open a fixed deposit with a financial institution and then apply for a credit card against it, they do not ask for additional documentation. You get a percentage of funds approved right away. The FD acts as security on loan. In case of default, the lender holds the right to pick up funds from your FD.

This makes the approval process quick and hassle-free. Another convenient feature is that you do not need to have high-value FD. A minimum of Rs. 10,000 to Rs. 20,000 FD will avail you credit cards against FD.   

  • Improve credit score: Many individuals avail a credit card against FD for the sole purpose of improving their credit score. When you avail a credit card, rating agencies and financial institutions follow your credit activity. If you pay your bills on time and refrain from using more than 30% of your credit limit, you credit score will improve considerably. It is one of the exceptional ways how you can use a credit card to improve your credit score.

Having a good credit score will benefit you when you apply for an unsecured credit. In cases of unsecured credit like personal loans, lenders look for a high credit score of 750 and above. Maintaining a healthy credit activity will ensure that you have a satisfactory credit score. In such a case, availing unsecured loans will be quick and easy. Make sure you know how to check credit card balance to keep your spending within 30% of your limit.  

Additionally, you will be eligible for credit cards like the Bajaj Finserv RBL Bank SuperCard. This credit card combines the power of 4 cards in one and brings several industry-first features.

Bajaj Finserv also brings you pre-approved offers on credit cards, which makes the availing process quick and hassle-free. These offers are also available on all major financial products like personal loans, business loans, and home loans etc. You can take a look at your pre-approved offer by providing your name and phone number. 

  • Offers and rewards – Secured credit cards provide offers and rewards similar to standard ones. You can avail discounts on movie tickets, discounts on dining, fuel surcharge waiver, and more.
  • Worldwide acceptance – Some of the secured credit cards are accepted globally. You can use them as high as 20 million outlets overseas. These cards can also be used at more than 3 Lakh outlets in India.

You can also use a secured credit card to transfer your existing credit card balance. Few secured credit cards enable you to move your existing debt to the former and enjoy lower rate of interest. Usually, these cards enable you to pay the balance in few EMIs with attractive interest.   

Cash withdrawal however can bring down your credit score. Learning how to check credit card balance will help you maintain a high credit score. Secured credit cards are highly beneficial, given that they allow you to keep your FD as well as enjoy the benefits of credit cards.