A credit card on FD is emerging as a practical solution to facilitate access to credit for those with poor creditworthiness. In these cards, the deposit lowers the risk of default, safeguarding the issuers’ interest. This strengthens your application and boosts your chances of approval. In addition to getting access to instant credit, these cards come with various attractive benefits and these add value to your experience. Here’s a quick overview of how a secured credit card functions.

Understanding Credit Cards Against FD

In a credit card against FD, you pledge your fixed deposit to avail of the facility. This deposit serves as a security against non-payment of your dues, and hence, getting a card becomes easier and more accessible. A secured credit card is ideal for applicants who:

• Don’t have a credit history yet
• Possess a weak credit history
• Have an irregular source of income
• Have a low-income, entry-level job

Pros of Getting a Credit Card Against FD

These cards offer various benefits, such as:

Increases Chances of Approval

Getting approval for unsecured cards relies heavily on your credit score. A low score generally implies higher chances of non-payment, which means you likely wouldn’t get the card. However, opting for the credit card on FD facility solves this problem. Here, the deposit serves as collateral and this adds a layer of security for the issuer. As such, you have a higher chance of getting a card. Keep in mind that pledging your FD as collateral does mean that the issuer has the option to recover losses due to defaults from your FD.

Comes with Lower Interest Rates

Issuers levy an interest when you don’t pay the bill on time and in full. A higher rate means a higher cost. Since your fixed deposit serves as a way to recover the unpaid amount, issuers generally levy comparatively lower rates on these cards. These can also come with comparatively lower annual fees and other charges, including:

• Late payment charges
• Overlimit fees
• Late payment charges

Includes a Comparatively Relaxed Eligibility Criteria

The main reason to opt for credit cards on FD investments is that it helps you qualify with ease. As such, issuers set simpler terms. These requirements are comparatively relaxed because of the security offered by the deposit. The requirements revolve around:

• The amount and tenure of your FD
• The institution holding your FD

• Your income and employment
• Your age and residence

Brings Down the Documentation Requirements

In addition to relaxed eligibility criteria, you also benefit from submitting less paperwork. This also speeds up the verification process and makes the approval process quicker. You generally have to submit the following documents:

• Residence proof
• Identity proof
• Fixed deposit certificate

Offers an Opportunity to Build or Improve Credit History

If you’re new to credit, you may not have a history to prove that you are creditworthy. This can also make access to credit challenging. However, a credit card on FD can help you get started and without taking on unnecessary costs. Since these cards don’t require you to have a stellar credit profile, you can use them to avail of instant credit. This access, in turn, gives you a chance to build a history to build your creditworthiness and improve your eligibility for other forms of credit. All you need to do is pay the bill without any delays.

Allows You to Continue Your FD Investment

To apply for a credit card on FD, you don’t need to disrupt your investment. This means that your deposit continues, and you keep earning interest on it as per your existing interest rate till the chosen tenure. Pledging your fixed deposit as security for the credit card does not interrupt interest gains.

Comes with FD-Linked Limit 

Generally, issuers offer a percentage of your FD investment as the credit limit. This gives you better control over the limit, as you can decide the deposit amount. For instance, if the issuer offers up to 90% of the deposit as a limit and you want a limit of around ₹40,000, you can consider putting up an FD of up to ₹60,000. However, remember that this is solely at the issuer’s discretion. If you prefer a high credit limit on your credit card against FD, you can consider getting the secured One Credit Card. This credit card on FD comes with a credit limit of up to 100% of your fixed deposit amount, offering more availability of funds to make transactions confidently. You can also enjoy easy conversion of your purchases into budget-friendly EMIs and various other benefits. In addition to these perks, this card comes with zero joining fees, annual fees, and reward points redemption charges. Moreover, you can manage your application and transactions with ease through the powerful mobile app. Apply now to get started.