With a credit card on FD (fixed deposit), you can enjoy all the benefits of a traditional credit card without a credit history. You can also avoid the stress of meeting rigid eligibility criteria. You can use these cards to carry out a wide range of transactions while earning interest on your fixed deposit.
Apart from that, you can use this credit card’s unique features to build your creditworthiness over time. There are numerous benefits attached to the usage of an FD credit card. By understanding more about its functionality, you can use it to maximise your savings.
Important Aspects and How FD Cards Work
Credit cards backed by FD are known as secured credit cards. To best utilise them, you need to understand what they are and how they work.
When you apply for a credit card on your fixed deposit amount, the deposit acts as a security. You can use this card as a traditional credit card for daily transactions. The credit card limit on your FD credit card is based on your deposit.
Most issuers provide up to 80%-90% of your deposit amount as the card limit. Just like you have to with a traditional card, you need to pay your bills in full on time. That way, you can maintain a good credit score.
Upon multiple defaults, the financial institution can use your deposit amount to clear your bills. Before taking such a drastic step, your financial institution will notify you, often multiple times.
Here are some important factors of a fixed deposit-backed credit card:
Reward Program
This card may not always offer you lucrative reward programs like a traditional credit card. Some FD-backed credit cards come with rewards points and cashback on specific purchases.
Withdrawing Fixed Deposit Amount
Once you are eligible for a regular credit card, you can withdraw your fixed deposit amount.
How to Apply
Applying for this card is a simple, straightforward process. Here is how:
- Visit the nearest branch with whom you have an FD account
- Fill out the application form with the necessary details
- Provide the necessary documents
- Submit the application form
You can also apply online if the issuer facilitates that. If you do not have an FD account, you need to consider opening one with a minimum 6-month tenure.
Advantages of Using FD Credit Cards
There are numerous benefits attached to a secured credit card. For example, most financial institutions charge relatively lower interest rates compared to traditional credit cards. Even if you miss a bill payment, the interest incurred on it is lower.
Other benefits you can enjoy using an FD-backed credit card include:
Increase in Credit Limit
Your limit is set by the issuer, depending on your fixed deposit amount. By increasing your deposit amount, you can access a higher card limit.
Improving Credit Score
You can apply for a fixed deposit credit card without a credit history or even with a lower credit score. Doing so will help you build your credit score over time if you repay responsibly.
Access to a Regular Card
If you want access to a traditional credit card and are falling short on your credit score, an FD-backed credit card can help. This way, you can build your credit score and apply for a regular credit card when you reach the optimum credit score.
Optimal for New Users
Applying for a credit card for the first time can be daunting due to high interest rates and other charges. In that case, you can use an FD credit card and learn how to use a credit card. Later, you can apply for a traditional one if you want.
These cards are great for students with no credit history, allowing them to build it over time.
Simple Procedure
You can get access to an FD card by following a basic process and submitting minimal documents. It is a simplified process that does not require income proof. The only mandatory criterion is for you to have a fixed deposit account.
Unstable Income
Unlike traditional credit cards, you can access an FD card with a stable income. This feature makes it an optimal choice for people with irregular incomes. For instance:
- Seasonal workers
- Homemakers
Moreover, credit cards on FD can be a boon, helping you avoid added interest rates by paying bills on time. If you are looking for such a credit card, the FD-backed One Credit Card can be an excellent choice. You can get it by booking an FD of just ₹5,000 and earn 5X reward points on the top two spending categories, no matter what they are.
Using the full-stack One Credit Card mobile application, you can easily check your transactions and manage your finances. Save more with offers on bill payment, rent, entertainment and more. Download the app or visit the website and apply now to enjoy this lifetime-free credit card!
