Credit Card Against FD (Fixed Deposit)

What is the credit card against fixed deposits?

 

Credit cards are plastic cards issued by banks or financial institutions that enable people to make cashless transactions. To qualify for a credit card, a person must have a good credit score, regular income, and satisfactory documentation. 

 

To overcome these demands, a credit card against fixed deposits has been launched by banks and financial institutions. Credit cards are issued against your deposited FD amount, and a card limit depends on the FD amount. The credit card against fixed deposit rates will consider only 80% to 90% of the FD amount for a credit limit. It is beneficial for those people who have irregular sources of income. At the time of delay in paying the due amount, the amount will be directly deducted from the linked FD account after proper intimation from several communication channels.

 

The charges over late payments will be lesser from the unsecured credit cards. The interest rate on fixed deposit credit cards is also lower than on unsecured credit cards.

 

 

Applying for credit cards on FD is simple. All you need to do is open a Fixed deposit account at your bank. People do not need to submit income or identity proof to get a secured credit card. Your FD account will be considered as a security against your credit card. The amount of the FD deposit will decide the limit of a credit card.

 

Until the fixed deposit’s maturity, no bank can take credit cards from the cardholder. If the limit amount is not paid, the bank will deduct the amount from the cardholder’s fixed deposit. The bank also intimates the cardholder and reminds them for due payment. After that, it takes action.

 

People can use a credit card to make any payment online or offline. Credit cards are secured with four or six-digit pin codes. For security purposes, don’t share this code with others. Use the credit card within the prescribed limits. Pay your limit amount on a timely basis every month for consistency. Credit card interest rates may vary from bank to bank.

 

There are several types of credit cards issued by banks or financial institutions. Some are explained in detail below:

 

• Secured credit cards:

 

Secured credit cards are issued after the cardholder deposits the specified amount for security purposes. The bank reserves these cards for nonpayment of the credit card limit in case of a cash deposit.

 

• Rewards credit cards:

 

Reward credit cards are those where people receive cash back and points received over the payment of airline tickets, food expenses, grocery expenses, and much more. People also earn reward points for paying the due amount on time. It will be called a reward credit card. 

 

• Cashback credit cards:

 

In cashback credit cards you will earn cashback which means some percentage of payment will return from the amount spent. Cashback will only be received if there is non-compliance with any due payment and doesn’t exceed the credit card limit. 

 

• Low-interest credit cards:

 

Low-interest credit cards are those in which interest charged each month is low, and tenure is long, making the credit card more affordable. The interest amount is lower than average annual percentage rates (APR). 

 

• Travel credit cards:

 

Those cards that offer exciting deals related to travel are called travel credit cards. Special travel packages are given to cardholders over their maximum payment with credit cards. There are two varieties of travel credit cards co-branded and non-branded credit cards. 

 

• Student credit cards:

 

These credit cards are offered to students with a minimum age of 18. Student credit cards will help them pursue their higher education without financial difficulty. It is provided to college-level students. 

 

• Business credit cards:

 

Business credit cards are used for business purposes rather than personal use. It will help improve the business cash flow and helps in maintaining your business and personal finances separately. 

 

Features of credit cards against fixed deposits?

 

The primary features of credit cards against fixed deposits are discussed in detail.

 

• Affordable FD amount

 

Fixed deposit amount usually ranges from 10000 to infinity, which is affordable for many. So, people with a small FD account can also get a credit card on FD. The FD rates of all banks are different from each other.

 

• Build a strong credit score

 

A credit card over FD will help in building a solid credit score. Because of less 

 

• Offer an interest-free period

 

There are several types of credit cards, but only secured credit cards do banks or financial institutions offer an interest-free period that ranges from 48 to 55 days. The credit limit against fixed deposits will depend on the fixed deposit amount. The highest the FD rate will be the highest is the credit card limit. Most banks and financial institutions offer 70 to 80% of the deposited amount for credit card limits.

 

Feature of the credit card on FD

 

• Simultaneously earn interest

 

After issuing credit cards over fixed deposits, banks do not stop adding interest over fixed deposits. People will receive interest simultaneously with credit card services. A fixed deposit interest rate will differ from bank to bank. 

 

• Less documentation

 

As we know, all essential documents are submitted at the time of fixed deposit. So, significantly less documentation is required before applying for a credit card against fixed deposits.

 

• Earn rewards

 

The cardholder also earns several rewards over credit cards against fixed deposits. The reward can be cash back, movie ticket vouchers, airline tickets, and many more.

 

• Digital application process

 

Without visiting a bank, people can apply for a credit card against FD online while sitting anywhere or anytime. Online credit cards are now readily available.

 

• Zero renewal fee

 

People can renew their credit cards after maturity without paying any renewal fees. 

 

List of banks offering credit cards against fixed deposits

 

The best credit cards against FD in India offered by several banks are explained in detail below that provide the best FD rates in banks:

 

• Axis bank

 

Axis bank offers a credit card against fixed deposits named Insta easy credit card. The minimum limit for Axis bank Fixed Deposit amount is Rs. 20,000. The credit limit is equal to 80% of the FD amount with 100% cash withdrawal service. The maximum free credit limit days will be 50. 

 

• SBI bank

 

SBI bank offers a secured credit card with an FD amount named SBI Unnati. The minimum FD amount will be Rs. 25000. This bank will provide services like no annual fees for the first four years and earn one reward point on a minimum spend of Rs.100. It also offers a waiver of a 1% surcharge for each transaction between Rs. 500 to 3000. 

 

• ICICI bank

 

ICICI bank offers a credit card against FD named ICICI bank instant platinum credit card. The minimum FD limit over such an account is Rs.10000. It provides zero annual fees if the cardholder has a valid FD account. It also offers services such as existing visa offers on wellness, dining, hotels, and many more. This bank provides the best FD interest rates.

 

• Kotak bank

 

Kotak bank credit card against FD is 811 #DreamDifferent Credit Card Online. People will get it with the minimum FD amount of Rs. 15000. There are no annual or joining fees for getting this credit card. The cardholder will earn 500 bonus reward points on activating the credit card. 

 

• Yes bank

 

Yes bank offers the credit card against the FD amount named YES prosperity rewards plus credit card. For getting this credit card, a minimum FD amount should be rs. 30000. People will get accelerated rewards on supermarket and grocery spending.

 

• Bajaj Finance

 

Those who want to get a Bajaj credit card can apply online or offline. The maximum limit over the Bajaj finance FD is up to Rs. 4 lakh. The card cannot be used to withdraw money from ATMs but to pay for online and offline shopping services. The maximum bank fixed deposit rates are different for different banks.

 

 How to invest in Fixed Deposit via Kuvera

 

One of the advantages of investing in FDs is that you can apply for credit cards against them. 

 

 If you are yet to open an FD account, you can begin on Kuvera. Even with your primary bank account linked to your Kuvera account, you can invest in FDs of banks and NBFCs. Here are the simple steps to book an FD on Kuvera: 

 

Step 1: Download the Kuvera app or visit our website and sign up.

Step 2: Complete your KYC with PAN, Aadhaar, and In-person verification through video.

Step 3: Select the ‘Invest’ option from ‘Home’

Step 4: Select ‘Fixed Deposits’

Step 5: You will see a list of multiple fixed Deposit options on Kuvera, sorted by tenure, bank, NBFC etc. Click on any FD to check its tenure, interest rate, and minimum deposit required. To be sure, check the lock-in period of the fixed deposit.

Step 6: Select the fixed deposit you want to invest in, and tap on ‘Start FD’

Step 7: You will be asked to provide your primary bank account details – IFSC code, account number and account type. 

 

 Eligibility to apply for credit cards against fixed deposits

 

The eligibility requirements may differ from bank to bank and person to person. Credit cards against fixed deposits may only apply to individual residents who have a fixed deposit in a particular bank. Some of the common requirements of all banks are listed below:

 

• The applicant must have a Fixed deposit account in a particular bank with a minimum value of Rs.10000. 

 

• The fixed deposit account has a minimum tenure of 6 months and minimum age of 18 years. 

 

• A credit card against fixed deposits will only be available to residents of India rather than non-foreign residents. 

 

• Some people are not eligible for credit cards, such as HUF, minors, third parties, partnership firms, foreign nationals, trusts, societies, etc.

 

How to apply for a credit card against fixed deposits?

 

There are two methods of applying for a credit card against a fixed deposit: one is offline by a manual visit to a bank, and the other is online on the official website of the respective bank where you have an FD account.

 

For a secured credit card, you must have an FD account in a bank. Without an FD account, no bank will issue a secured credit card. Some banks provide a complimentary secured card over your FD account.

 

After opening the FD account with the bank, an FD holder needs to apply and visit the bank to apply for a credit card. Another method is to apply online by visiting the bank’s official website while sitting anywhere anytime.

 

For a secured credit card, you need to have an active FD account with the prospective bank. No credit card is issued against fixed deposits on which loan and overdraft have been taken.

 

Documents required to apply for a secured credit card

 

Initially, no documents needed to be submitted to get a secured credit card. Secured credit cards are issued against the security of a fixed deposit amount. And a fixed deposit account cannot be opened without identity and residence proof.

 

So, the proofs submitted when opening a fixed deposit account will be considered for getting secured credit cards. People don’t need to submit proofs again and again. Once, the bank must check the validity of the submitted proof for verification purposes.

 

Benefits of having a credit card against fixed deposits

 

There are some benefits of having a credit card against fixed deposits that are listed below in detail:

 

• Instant service:

 

Secured credit cards are provided without any cumbersome process. Only you need to have an FD account in a prospective bank. After monitoring, the bank will instantly provide the secured credit card to the fixed deposit holder.

 

• No CIBIL score is required:

 

Secured credit cards are issued without a monitoring history by banks. It will be helpful for those people who have had poor credit scores in the past. It is the most beneficial advantage of secured credit cards. 

 

• No documentation:

 

The proof attached to the fixed deposit account will be considered for issuing a credit card against it. So, there is no need to submit any identity or residence proof again to get secured credit cards. 

 

• Earn interest over FD:

 

After getting a credit card service, a fixed deposit account holder will still earn interest on it simultaneously. Specified interest will be regularly added to the FD account monthly and quarterly until its maturity. 

 

• Credit card limit depends on FD amount:

 

The higher the FD amount will be, the higher will be the credit card limit. The maximum limit is 70 to 80% of the fixed deposit account. Compared to unsecured credit cards, the secured credit card will get a maximum limit.

 

• Earn rewards:

 

People will earn rewards regularly on secured credit cards through cashback, airline ticket vouchers, discounts, and many more. It will attract more and more people to get credit cards over their fixed deposit accounts. 

 

• Grace period:

 

Over the secured credit cards, a grace period is provided to pay the outstanding amount. The period will last up to 45 days. People will also enjoy its benefits after the amount is due.

 

Import your stock portfolio to Kuvera and check any stock’s Current Price, Day’s High, Day’s Low, a 52-week high, a 52-week low, 1-year change, 5-year change, Price to earnings per share (PR Ratio), Market capitalization to book value (PB ratio), EPS for the last 12 months of the company (TTM EPS), Dividend yield, Market Capitalisation, Trading Volume and Average Traded Volume. You can also place Buy and Sell orders of any stocks on the Kuvera app.

 

Conclusion

 

Secured credit cards are common nowadays and will help people rebuild their credit scores. It is beneficial to manage the day-to-day expenses and will repay them in the future. Through this, people can become responsible for their necessities. Good management of a secure credit card will depend on the cardholder. It will result in increasing your credit score. 

 

FAQs

 

• Am I allowed to use my credit card against a fixed deposit for withdrawing cash at an ATM?

 

The banks will allow the secured cardholder to withdraw money at an ATM. For secured credit cards, the withdrawal limit will be 85%. 

 

• Are foreigners allowed to get a credit card against their fixed deposits?

 

The answer to this question is no because our Indian banks don’t allow foreigners to get secured credit cards over their fixed deposits.

 

• Credit cards against fixed deposits are suitable for which category of people?

 

There are many benefits of a secured credit card to lots of people are listed below in points:

 

• • People who have a low credit history. 
  • People who are suffering to meet day-to-day expenses.
  • Salaried employees.
  • People with a bad reputation.
  • Live in an area that the lender blacklists.

 

• What is the minimum amount of fixed deposit for a credit card?

 

The minimum amount of fixed deposit may differ from bank to bank. Some consider 10000 as a minimum fixed deposit amount to issue a secure credit card over it, while others consider 25000 as an initial limit for FD.

 

• What are the disadvantages of secured credit cards?

 

The disadvantages of secured credit card are:

 

• • FD accounts will be locked against a secured credit card.
  • The only balance amount will be refunded if people fail to pay the due amount on time. 
  • The fixed deposit interest rate will decline after issuing a secured credit card.
  • The FD holder cannot break the FD till he holds the card.
  • The credibility of the fixed deposit holder is also affected.

 

 

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