Credit cards are a highly preferred payment option as they offer approximately several benefits including 30 days of interest-free balance and can be used for cashless purchases online and offline. Most credit cards promise rewards such as cashback and offers, which makes them more popular.
Since credit cards are instruments of credit, they are generally only issued to individuals who fulfil the required criteria, like applicant's occupation, gross income, credit history, and more.
Types of Credits
There are two types of credit cards:
● Unsecured credit cards : These are issued based on your income proof, credit history and CIBIL scores.
● Secured credit cards: These are linked to Fixed Deposits (FDs) and are ideal for people who are still building their credit scores.
Who can Apply for FD Credit Card
● Applicants must be a minimum of 21 years of age and be an Indian citizen.
● The applicant must have an FD with the bank or financial institution.
● The said FD must be free, i.e. it should not be used as collateral for any other loans.
Features of Credit Cards linked to Fixed Deposits
● Applicants must be a minimum of 21 years of age and be an Indian citizen.
● It helps you get a credit card without income proof or credit history.
● The documentation required for availing of the credit card offer is minimal. The application process is faster and hassle-free if you already have an FD with the bank.
● The credit limit offered by the institutions ranges between 75% to 100% of the FD amount.
● The minimum tenure of an FD against a credit card is 6 months.
Benefits Of Credit Cards Linked to Fixed Deposits
-
Easy approval: The application process for a secured credit card is easy and hassle-free. Since the card issuer already has the FD as collateral, it faces a limited risk in extending credit to an individual with no income proof or limited credit history. It makes the card easier to procure.
-
Income proof not required: You are not required to furnish Income proof when you apply for a new credit card. Your FD serves as collateral. You could be a student, a person working on a start-up or do not have access to your income proof. All these people are the primary beneficiaries of FD-linked credit cards.
-
Low-interest rates: The credit rates charged by banks for FD credit cards are lower than those of unsecured credit cards. This is because your FD is with the bank and serves as collateral against the credit card.
-
Build a strong credit history: FD credit card is the best tool if you want to build a strong credit history. A strong credit score makes it easier to secure other loans, such as personal loans, car loans, housing loans, education loans, etc., later in life.
-
Improve and build your credit score: Timely payment of your FD credit card bills helps you strengthen your credit score.
-
Continued earnings: FDs ensure fixed returns and secure investments. In an FD-linked credit card, the FD continues to accrue interest while allowing the user to enjoy the benefits of the new credit card.
-
Rewards and benefits: An FD credit card offers benefits such as credit card reward points on shopping, travel, dining, etc, that help you save money every time you make a transaction.
Conclusion
Credit cards linked to FDs offer financial freedom and security. They provide a win-win solution with the power to build credit while earning interest on your savings. Embrace the convenience of cashless transactions and the assurance of a secured deposit. Let these cards be your trusted companion, paving the way for a life filled with endless possibilities and peace of mind.
