A fixed deposit credit, also known as a secured credit card, is a credit card that is insured against a fixed deposit account as collateral. People not eligible for unsecured credit cards can apply for fixed deposit credits and use them to increase their credit scores to become eligible for loans and unsecured credit cards. Features of FD credit cards include the ability to earn interest on the fixed deposit while using the credit card and the flexibility to increase the credit limit. However, just like unsecured credit cards, they also can become liabilities if their bills are not repaid properly. Defaulting on fixed deposit credit cards can damage credit scores and cause seizure of the fixed deposit amount. Please keep reading to learn about all the features of FD credit cards.
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Features of FD Credit Cards
These are the primary features of FD Credit Cards:
One of the main features of FD credit cards is that they are easy to get approved by the bank. Unlike regular credit cards, fixed deposit cards do not require any income proof, credit history, or KYC documents from the applicant. The only requirement is that the applicant should have a fixed deposit account with the bank that issues the credit card. The fixed deposit account acts as collateral for the credit card, and if the cardholder fails to pay the bill, the bank can recover the amount from the fixed deposit account. This reduces the risk for the bank and makes them more willing to issue credit cards, so the approval process for fixed deposit credit cards is quick and hassle-free.
Another of the features of FD credit cards is that they have lower fees and charges than unsecured credit cards. This is because the bank does not incur any risk or cost in issuing the credit card, as the fixed deposit account backs it. These credit cards usually have lower interest rates, late payment fees, over-limit fees, and cash withdrawal fees than unsecured credit cards. Some banks even waive the joining and annual fees for fixed deposit credit cards, making them more affordable and attractive for cardholders. Low fees of fixed deposit credit cards can help cardholders save money and avoid unnecessary charges. They can also help them to pay their bills on time and maintain a good credit score.
A flexible limit is another of the features of FD credit cards that make them convenient and suitable for different needs. The credit limit of a fixed deposit credit card is generally 80% to 90% of the fixed deposit amount. This means that the cardholder can choose the amount of fixed deposit they want to keep with the bank and get a corresponding credit limit. For example, if the cardholder has a fixed deposit of Rs. 50,000, they can get a credit limit of Rs. 40,000 to Rs. 45,000 on their fixed deposit credit card. If they want to increase or decrease their credit limit, they can increase or decrease their fixed deposit amount accordingly. The flexible limit of fixed deposit credit cards gives the cardholder the freedom to manage their finances and spending according to their situation and preference.
Earning interest is another of the features of FD credit cards that make them profitable and attractive for cardholders. The fixed deposit linked to the credit card continues to earn interest at the prevailing rate, even when the credit card is used. This means that the cardholder can enjoy the convenience and benefits of a credit card while also earning returns on their investment. The interest earned on the fixed deposit can help to offset the fees and charges of the credit card or even exceed them in some cases. Earning interest on fixed deposit credit cards can help the cardholder to grow their savings and wealth over time. They can also use the interest income to pay their credit card bills or reinvest in other avenues.
A fixed deposit credit card is a great way to get a credit card for those who are not eligible for unsecured credit cards, either due to a low credit score, lack of steady income or any other such reasons. The features of FD credit cards are the same as those of unsecured credit cards. If the bills of fixed deposit credit cards are repaid regularly, and on time, it can improve credit scores and make future applications for loans and credit cards possible. However, if the bills are not paid on time or default, it can damage credit scores and even lead to the seizure of the fixed deposit. Cardholders should therefore learn about the disadvantages and features of FD credit cards before applying for them.
1. Is it possible to report a lost or stolen fixed deposit credit card and get a replacement?
Yes, reporting a lost or stolen fixed deposit credit card and getting a replacement is possible. Call your credit card issuer immediately to report the loss or theft of your credit card card.
2. What is the minimum amount required for a fixed deposit when applying for a credit card?
The minimum fixed deposit amount required in a fixed-deposit credit card depends on the bank or issuer. Generally, the minimum fixed deposit amount ranges from Rs. 10,000 to Rs. 25,000.
3. Can a fixed deposit credit card improve my credit score?
Yes, a fixed deposit credit card can improve your credit score if used responsibly and regularly. By repaying credit card bills on time, you can build or improve your credit history and score. However, you should also avoid overspending, missing payments, or defaulting on your card, as these can negatively affect your credit score and fixed deposit.
4. Can the credit limit of a fixed deposit credit card be increased?
Yes, increasing the credit limit of a fixed deposit credit card is possible. To increase the credit limit, you can either increase the fixed deposit amount or request the bank to revise the limit based on your repayment history.