Which Credit Card Is Best Against Fd

Credit cards against fixed deposits, also known as secured credit cards, are a type of credit card that is issued against a fixed deposit account held with a bank. The fixed deposit serves as collateral, and the credit limit on the credit card is typically a percentage of the fixed deposit amount, typically about 75% to 85% of the FD amount.

Features of Credit Card Against FD

1. Credit Limit - The credit limit of the credit card is typically linked to the amount of fixed deposit held by the cardholder. The credit limit is usually a percentage of the fixed deposit amount, typically ranging from 70% to 90%. The higher the fixed deposit amount, the higher the credit limit.
2. Security Deposit - The cardholder needs to place a fixed deposit with the issuing financial institution as collateral to secure the credit card. The fixed deposit is typically held by the financial institution for the duration of the credit card's validity or until the cardholder closes the credit card account.
3. Interest Rate - Credit cards against fixed deposits usually have lower interest rates compared to regular credit cards, as they are secured by the fixed deposit. The interest rate on the outstanding balance of the credit card is charged only if the cardholder does not pay the full amount due by the payment due date.
4. Credit Card Fees - Credit cards against fixed deposit may have lower or no annual fees compared to regular credit cards. However, some issuing financial institutions may charge an annual fee or other fees for services such as cash advances or balance transfers.
5. Credit Card Benefits - Credit cards against fixed deposits may offer similar benefits as regular credit cards, such as rewards programs, cashback, and discounts on purchases. However, the specific benefits and rewards may vary depending on the issuing financial institution and the credit card's terms and conditions.
6. Credit Card Usage - Credit cards against fixed deposit can be used for various transactions, including online and offline purchases, bill payments, and cash withdrawals from ATMs. The cardholder can use the credit card up to the available credit limit, which is determined by the fixed deposit amount.
7. Credit Card Repayment - The cardholder needs to make minimum monthly payments towards the outstanding balance of the credit card, as per the credit card's terms and conditions. If the cardholder fails to make the minimum payment, the issuing financial institution may utilize the fixed deposit as collateral to recover the outstanding balance.
8. Credit Score - Credit cards against fixed deposit may not impact the cardholder's credit score directly, as they are secured by the fixed deposit. However, timely payments and responsible usage of the credit card can indirectly improve the cardholder's credit score.

Benefits of a Credit Card Against FD

1. Potential for Higher Credit Limit - The credit limit on a credit card against fixed deposit is typically linked to the amount of fixed deposit held by the cardholder. This means that individuals with higher fixed deposit amounts may be eligible for higher credit limits, providing them with more purchasing power and flexibility in managing their expenses.
2. Credit Building Opportunity - Credit cards against fixed deposits can also help individuals build or rebuild their credit scores. By making timely payments and responsibly managing the credit card, cardholders can establish a positive credit history, which can be beneficial when applying for other types of credit in the future, such as loans or mortgages. 
3. Minimum Documentation Needed – The credit card against FD does not require income proof. This allows students, homemakers, senior citizens, part-time professionals, etc. to get access to a credit card without having a certain income threshold. 

Banks Offering Credit Cards Against FD

How to Apply for a Credit Card Against Fixed Deposit 

1. Choose the Bank - Research and select a bank that offers credit cards against fixed deposits in India. You may consider factors such as interest rates, credit limits, fees, and features offered by different banks to make an informed decision.
2. Check Eligibility - Review the eligibility criteria set by the bank for obtaining a credit card against fixed deposit. Typically, you need to have a fixed deposit account with the bank for a certain minimum amount, which serves as collateral for the credit card.
3. Gather Required Documents - Gather the necessary documents required for the credit card application process. This may include identity proof (such as PAN card, Aadhaar card, passport, etc.), address proof (such as utility bills, rental agreement, etc.), passport-size photographs, and a copy of the fixed deposit receipt or certificate.
4. Fill and Submit Application Form - Obtain the credit card application form from the bank's website, branch, or customer service center. Fill in the form with accurate and complete information, including personal details, fixed deposit account details, employment details, etc. Attach the required documents along with the application form and submit it to the bank.
5. Verification and Credit Check - The bank may verify the information provided in the application form and conduct a credit check to assess your creditworthiness. Since the credit card is secured against a fixed deposit, the credit check may be minimal or not required in some cases.
6. Fixed Deposit Pledge - Once your credit card application is approved, the bank may require you to pledge your fixed deposit as collateral. This may involve signing a fixed deposit lien or pledge agreement with the bank, which gives them the right to liquidate the fixed deposit in case of default on credit card payments.
7. Credit Card Issuance - Upon successful verification and fixed deposit pledge, the bank will issue the credit card against your fixed deposit. The credit limit on the card will typically be a percentage (usually 80-90%) of the fixed deposit amount.

Conclusion

Credit cards issued against Fixed Deposits are secured credit cards. The FD is held as collateral for the credit card. Normally, 80-90% of the FD is issued as the credit card limit. Credit cards issued against FD need minimal documentation. They often need no income proof hence making credit cards accessible to housewives, students, etc. Evaluate all your options before you opt for a credit card against FD.

FAQ of Which credit card is best against FD

1:What is a credit card against a fixed deposit?

A credit card against fixed deposit is a type of credit card offered by banks in India, where the credit limit is secured against a fixed deposit account. The fixed deposit serves as collateral for the credit card, and the credit limit is typically a percentage (usually 80-90%) of the fixed deposit amount.

2:Who is eligible to apply for a credit card against a fixed deposit?

The eligibility criteria for a credit card against fixed deposit may vary depending on the bank. Typically, you need to have a fixed deposit account with the bank for a certain minimum amount, which serves as collateral for the credit card. The bank may also consider your creditworthiness and employment details while evaluating your eligibility.

3:Can I close my fixed deposit account without closing the credit card against it?

Typically, you may not be allowed to close the fixed deposit account without closing the credit card against it or clearing the dues. The fixed deposit serves as collateral for the credit card, and the bank may require the fixed deposit account to be maintained until the credit card is closed or the dues are cleared. It's important to understand the terms and conditions related