There are many instances of a credit card claim rejection by the companies on various grounds. If the applicant lacks a good credit history or has a bad credit score, there are chances that the bank might not be in the favour of issuing a credit card to the user.
Hn the brighter side, we know the plethora of benefits that come with a credit card. They are not only essential in times of financial emergency, but they also help to improve a credit score for future loan applications. In addition, some e-commerce sites only let you use credit cards to make EMI purchases for certain goods.
So what can be done in such a situation?
Don't worry, there is another option for obtaining a credit card. You may apply for a credit card using your fixed deposits as collateral. Fixed deposit investments are incredibly well-liked since so many banks offer competitive rates and allow their clients to make significant returns. If you've been looking for a credit card for a while, you can consider applying for a secured credit card, against your fixed deposit.
What is a credit card against fixed deposit?
As the term implies, a bank will provide a consumer a credit card known as secured credit card in return for an FD that he guarantees as security or collateral for the card. It is appropriate for consumers who do not have a credit history or have a poor credit score.
Customers having FD accounts at banks and other financial institutions who want to establish their credit are offered secured credit cards. When such a secured credit card is issued, the bank places a lien (a claim or legal right) on the FD until the customer returns the credit card.
If you already have an FD account, you may apply for a credit card on FD by going to the local bank location. You may also accomplish this by going to the bank's website. If you don't already have an FD account, you can open one by going to the closest bank branch. Some banks give out credit cards as a bonus when you create an FD account. If not, you can submit an application for the same online.
What are the benefits of a credit card against fixed deposit?
Before granting a credit card to a consumer, banks often verify that person's credit history. However, those with bad credit or no credit history can still obtain a secured credit card. On the other hand, by making prompt payments using a secure credit card, you can raise your credit history or CIBIL score.
Secondly, banks like to issue credit cards to clients who have steady sources of income. This is not the case with a secure credit card, though. Since fixed deposits are regarded as evidence of financial security, banks do not need their customers to provide any documentation of their income. In reality, low-income individuals can use the money from their fixed deposit to qualify for a greater credit card limit.
Additionally, it is significantly simpler and faster to apply for a credit card using your fixed deposit as collateral. The amount of documentation required is low because you already have a bank account and it has the majority of the necessary papers. With a secured credit card, other papers, such as proof of income, become less significant because your fixed deposit serves as a security deposit.
Furthermore, regular credit card holders get several benefits including complimentary travel insurance, personal injury coverage, reward points, etc. In this case, you may take advantage of credit card privileges as well as the advantages of making an investment in a fixed deposit. The best FD rates are offered by banks, and the interest you receive on your deposits increases the benefits of a credit card.
Credit cards against fixed deposits in India
|Name of the bank||Name of the credit card||Minimum FD amount required (Rs.)|
|State Bank of India||SBI Unnati||25000|
|Axis Bank||Insta Easy Credit Card||20000|
|Yes Bank||YES Prosperity Rewards Plus Credit Card||30000|
|ICICI Bank||ICICI Bank Instant Platinum Credit Card||10000|
|Kotak Bank||811 #DreamDifferent Credit Card Online||15000|
Note: The above data has been compiled from ETMoney.
For those with little income, bad credit, irregular income, no income proof, senior citizens, and stay-at-home mothers, the secured credit card against fixed deposit is the best option. However, a major disadvantage of secured credit cards is that the bank can seize your fixed deposits in order to recoup the credit amount if you fail to pay your credit card dues with interest over the course of several months. Additionally, the fixed deposit is linked to the credit card; as a result, you cannot withdraw early, not even in an emergency.