Availing of a credit card against fixed deposits? Know details here
New Delhi: The secured credit card against fixed deposit is the best option for those with little income, bad credit, irregular income, no income proof, senior citizens, and stay-at-home mothers.
There have been numerous reports of companies denying credit card claims for a variety of reasons. If the applicant does not have a good credit history or has a low credit score, the bank may decline to issue a credit card to the user.
On the bright side, we are all aware of the numerous benefits that come with a credit card. They are not only necessary in times of financial emergency, but they also aid in the improvement of a credit score for future loan applications. Furthermore, some e-commerce sites only accept credit cards for specific goods purchased in equal monthly instalments (EMIs).
Don't worry, there is another way to get a credit card. You can apply for a credit card with the collateral of your fixed deposits. Fixed deposit investments are extremely popular because so many banks offer competitive rates and allow their customers to earn significant returns. If you've been looking for a credit card for a while, you should consider applying for a secured credit card, which is secured by your fixed deposit.
How to get a credit card against fixed deposits?
As the name implies, a bank will issue a secured credit card to a consumer in exchange for an FD that he guarantees as security or collateral for the card. It is appropriate for consumers with no credit history or a low credit score.
Secured credit cards are offered to customers who have FD accounts at banks and other financial institutions and want to establish their credit. When a secured credit card is issued, the bank attaches a lien (a claim or legal right) to the FD until the credit card is returned.
If you already have an FD account, you can apply for a credit card through your local bank. You can also do this by visiting the bank's website. If you do not already have a savings account, you can open one by visiting the nearest bank branch. When you open an FD account, some banks will give you a credit card as a bonus. If you do not have one, you can apply for one online.
Benefits of availing of a credit card against fixed deposits
Banks frequently check a consumer's credit history before granting them a credit card. Those with bad credit or no credit history, on the other hand, can still obtain a secured credit card. On the other hand, you can improve your credit history or CIBIL score by making timely payments with a secure credit card.
Second, banks prefer to issue credit cards to customers who have consistent sources of income. However, this is not the case with a secure credit card. Banks do not require customers to provide any documentation of their income because fixed deposits are regarded as evidence of financial security. In reality, low-income people can use their fixed deposit money to qualify for a higher credit card limit.
Furthermore, applying for a credit card with your fixed deposit as collateral is much easier and faster. The amount of documentation required is minimal because you already have a bank account that contains the majority of the required documents. Other documents, such as proof of income, are less important with a secured credit card because your fixed deposit serves as a security deposit.
Additionally, regular credit card holders receive a variety of benefits such as complimentary travel insurance, personal injury coverage, reward points, and so on. In this case, you can take advantage of credit card benefits as well as the benefits of investing in a fixed deposit. Banks offer the best FD rates, and the interest you earn on your deposits increases the value of a credit card.
The secured credit card against fixed deposit is the best option for those with little income, bad credit, irregular income, no income proof, senior citizens, and stay-at-home mothers. However, if you fail to pay your credit card dues with interest over a period of several months, the bank can seize your fixed deposits in order to recoup the credit amount. Furthermore, because the fixed deposit is linked to the credit card, you cannot withdraw it early, even in an emergency.