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Credit Card Against FD: Pros And Cons You Need To Know

Financial products are getting more inclusive today, and a credit card against FD is one such facility. You pledge your fixed deposit investment and get a credit limit against it, and this is called a secured credit card. 

Getting this type of credit card can be a great decision when:

  • You have a lower credit score
  • You are new to credit

The total credit limit that the credit card company offers on these cards is 75% to 85% of your FD amount. Some credit cards like the One Credit Card give you a credit limit of 100% of your FD amount.

Pros of a Credit Card Against FD

Getting this card can be useful in many ways:

  • Easy Application Process

One of the greatest advantages of getting a credit card against a fixed deposit is that you enjoy a simple and quick application process with minimal paperwork. This helps save your effort as well as time.

The main documents include:

  1. ID and address proofs 
  2. Fixed deposit receipt
  • Relaxed Eligibility Criteria

Since this is a secured credit card, the eligibility criteria are easy to meet. While a regular credit card requires income proof to assess your financial standing, in this case, your FD serves as security. 

So, you can get it quite easily by sharing basic details about yourself, your employment and age. 

  • Helps Build a Credit History

Making timely payments towards your credit card bills can help you build a positive credit history. This gets recorded by credit bureaus like CIBIL that generate your credit score. 

Getting a secured credit card helps you do this with ease, as sometimes, it is not easy to get approved for a credit card without a good score. A good credit score can also help you get easy and affordable access to loans. 

  • Higher Chances of Approval

When you apply for this type of credit card, your FD serves as a security. In case you fail to repay the bill, the credit card company can recover the dues through your FD. Therefore, they do not hesitate in approving your application quickly since their risk is lower.

  • Lower Interest Rates

Are you hesitating to apply for a credit card because of the high interest rates on unpaid balances? By getting a credit card against FD, you can avoid this issue as the interest rates for these cards are lower than regular credit cards.

Cons of a Secured Credit Card

Here are some limitations of such a credit card that you must know:

  • Lower Credit Limit

A disadvantage of getting a credit card against your fixed deposit is that the credit limit depends on the fixed deposit amount. However, you can solve this problem by applying for a credit card against your FD with a company that offers a higher value for the FD. 

  • Fewer Cashback, Discounts and Offers

The selling point of credit cards is the exciting benefits they offer, like:

  1. Cashback on purchases
  2. Discounts and deals
  3. Limited-time and festive offers
  4. Welcome or joining benefits
  5. Reward points on transactions

However, you might not get the best credit card offers as the benefits that come with these credit cards may be fewer as compared to regular cards.

  • Associated Fees

The charges associated with credit cards against fixed deposits can be a shock if you have not taken a credit card before. These charges include:

  1. Joining fees
  2. Annual renewal fees
  3. Late payment fees
  4. ATM cash withdrawal charges
  5. Over-limit fees
  6. Foreign transaction fees

Check these charges before you proceed, and look for issuers with the lowest charges to save more. 

  • Fewer Options

If you plan on applying for this secured credit card you might not get many options in the market. This is not true of regular credit cards, which are offered in a variety of categories to suit the needs of customers. 

  • Restrictions on FD Withdrawals

Another limitation of a credit card against a fixed deposit investment is that you are not allowed to withdraw your capital before:

  1. Your credit card reaches the expiry date
  2. You close your credit card

With these pros and cons in mind, you can decide if getting a credit card against FD is the right choice for you. To enjoy the benefits of high interest payouts on your fixed deposit, a higher credit limit and a range of deals and offers, go with the One Credit Card

This card comes with a number of attractive features, such as up to 5X rewards on top spends and easy conversion of your big-ticket spends into budget-friendly EMIs. What’s more, there are no joining fees, no annual renewal fee as well as no charges for redeeming your reward points. Apply now to get started.


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