With the broad acceptance of credit card and the facility to provide it, it is sometimes necessary to have a credit card. But not everybody is eligible to be one, and the bank can refuse the credit card due to reasons such as bad credit score, regular income not, and many others’ low pay. Credit card against fixed deposit is a product that is specially made for such people.

The product:
The bank asks the applicant to open a fixed deposit account with the auto-renewal facility in the bank. The bank marks the lien on this fixed deposit and usually provides a credit limit of up to 85% of the FD amount. The credit card works like a regular credit card while the FD continues to earn interest. If the customer loses and does not pay his dues for 60/90 days, the bank reserves the right to adjust the amount against the FD.

The FD amount can be less than Rs. 20,000 and may vary according to banks and credit card types (Gold, Platinum, etc.). Also, in most cases, the term FD should not be less than 180 days. Tax Saver FDs, Flexi-Deposit (Auto-Sweep FD), HUF / Society / Trust / Companies are not eligible for FD Credit Card.

We have listed the attributes of some essential banks that are offering credit cards against fixed deposits in different names.

  1. ICICI Bank Coral Credit Card Against Fixed Deposit
  2. SBI Advantage Plus Card
  3. Axis Bank Insta Easy Credit Card
  4. Kotak Mahindra Aqua Gold Card
  5. Central Bank Aspire Credit Card
  6. Bank of Baroda Assure Credit Card

Benefit:

  • You can get a credit card which you will not have under normal circumstances
  • Processing for cards is faster than regular cards. Apart from this, the required documents are low
  • Ordinary expenses and payments on this card can help to create/improve a credit score
  • Fixed Deposit Continues to earn monthly interest, while you enjoy interest-free loans for 45-55 days
  • Get all reward points, valid discount for the card issuing bank

loss:

  • Fixed deposit is not liquid. You can not break the FD unless you have a card
  • If you do not pay your outstanding payment for 60/90 days, then the bank can adjust the balance against the FD
  • A credit card is a double-edged sword – while it assures that, if not handled carefully, then you can get trapped in debt.
  • Interest on credit card ranges from 18% to 36% per year. So be prepared to pay higher attention in the case of default with other charges.