Ultimate Guide: How to Manage Your FD Credit Card Effectively

Fixed deposit credit cards are credit cards that use a fixed deposit account as collateral. The higher the fixed deposit amount, the higher the credit limit the credit card will have. These credit cards enjoy a lower interest rate than regular credit cards as a fixed deposit account has backed them. If the cardholder defaults on their credit card debts, the lender can reclaim their losses by seizing the fixed deposit amount. To avoid such extreme scenarios, every fixed deposit credit card holder must know how to effectively manage FD credit card. If you want to learn how to manage FD credit card, please keep reading.

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    Tips to Manage FD Credit Card

    A fixed deposit credit card can be a good option for people with a low credit score, irregular income, or insufficient documents to get a regular credit card. It can also help them build or improve their credit history by making timely payments. However, delaying or missing repayments will damage their credit rating and defaulting on the debt completely will lead to the seizure of the fixed deposit amount. Managing the fixed deposit credit card efficiently is important for maintaining a good credit score and securing the fixed deposit amount.

    Here are some tips that can help you efficiently manage FD credit card to avoid such negative outcomes:

    Choose the Right Card and Fixed Deposit Amount

    Different banks offer different fixed deposit credit cards variants with different features, fees, and benefits. One should compare the options and choose the one that suits their needs and budget. The fixed deposit amount should be enough to get a decent credit limit but not too high to compromise the liquidity or returns of the investment. The minimum fixed deposit amount required for a fixed deposit credit card ranges from Rs. 10,000 to Rs. 75,000, depending on the bank and the card variant.

    Pay Bills on Time and in Full

    When obtaining a fixed deposit credit card, it is essential to remember that the primary objective is to establish or enhance the credit score. Achieving this goal means paying the bills in full and on time every month, as late or incomplete payments could result in penalties, interest charges, and a negative impact on the credit score. In the event of defaulting on payments, the bank may seize the fixed deposit amount to recoup the outstanding balances. As a result, it is critical to use the card responsibly and within financial repayment capacity.

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    Use Less Than 30% of Credit Limit

    The credit utilisation ratio is another important factor to manage FD credit card. The percentage of the available credit limit is used on purchasing activities. If the ratio is high, it may indicate over-dependence on credit, which can lower the credit score. To maintain a good credit utilisation ratio and a healthy credit score, using less than 30% of the credit limit is advisable. For instance, if someone has a fixed deposit credit card with a limit of Rs. 50,000, they should spend at most Rs. 15,000 on it monthly.

    Avail Benefits And Rewards

    Fixed deposit credit cards offer several benefits and rewards, including cashback, discounts, lounge access, and fuel surcharge waiver. While these may not be as extensive as those provided by regular credit cards, it is still important to check the terms and conditions of these benefits and use them wisely. Doing so can save money and improve customer experience in the long run.

    Review Monthly Statements and Report Errors

    Carefully reviewing and checking every monthly report for the fixed deposit credit card can help detect unauthorised transactions, calculation errors and any other charges that might appear on the reports without the cardholder’s knowledge. Detecting these charges and then reporting them to the card issuer quickly can help avoid potential fraud and unnecessary fines and protect the credit score. Ensuring the fixed deposit credit card is only being used by the cardholder and fairly billed by the issuer is important for maintaining a good credit score.

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    Conclusion

    Manage your FD Credit Card effectively with tips on choosing the right card & FD amount, utilizing credit limits wisely, enjoying benefits & rewards, and reviewing statements. Avoid financial troubles and make the most of lower interest rates.

    FAQs

    1. Can I increase or decrease the credit limit on my fixed deposit credit card?

    Yes, you can increase or decrease the credit limit on your fixed deposit credit card by increasing or decreasing your fixed deposit amount. The credit limit is usually a percentage of your fixed deposit amount. You can contact your card issuer and request a credit limit change by adjusting your fixed deposit amount.

    2. Will I get a free credit report with my fixed deposit credit card?

    No, you will not get a free credit report with your fixed deposit credit card. You can get one free credit report every year from any of the four credit bureaus in India: CIBIL, Equifax, Experian and CRIF High Mark.

    3. Can I use my fixed deposit credit card internationally?

    Yes, you can use your fixed deposit credit card internationally if it has a global acceptance feature. However, you may have to pay foreign currency conversion charges and other fees for using your card abroad. You should check with your card issuer before engaging in international transactions.

    4. How does a fixed deposit act as collateral to avail of a fixed deposit credit card?

    A fixed deposit acts as collateral to avail of a fixed deposit credit card by providing security to the card issuer. If the cardholder fails to pay the credit card bill, the card issuer can break the fixed deposit and recover the outstanding amount.

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