Credit cards offer instant purchasing power. Today, banks offer credit cards against fixed deposits (FD). This is an attractive option for those who have no credit history or a poor credit score.
Unlike normal credit cards, which consider monthly income, credit score and many other factors, credit card against FD has none of this. All it requires is an FD with the issuing bank for a minimum value. The minimum amount varies across banks. It is called a secured credit card, because the fixed deposit serves as collateral for the credit card.
Credit card limit is usually decided by the bank. But in this case, your credit card limit is directly linked to your fixed deposit. Most banks provide 75% to 85% of FD as card limit.
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Because of convenience and instant credit facility, people tend to purchase credit cards. However, the banks check a number of criteria before approving the request. These are:
Now, if a person has no credit history or a poor credit score, he will find it difficult to get a credit card. In such cases, you can apply for secured credit cards. It is like borrowing your own money from the bank. There is no need to submit any income proof. Neither your credit history nor score is considered.
See Also: Check Credit Score Online
Given below are the features of a credit card against fixed deposit:
See Also: Credit Score India
Credit cards can get you into a debt trap real fast. Delaying timely payments increases the outstanding dues. This affects credit score, creating an impact on your future credit transactions or approvals. Although this risk is attached to every credit card irrespective of whether it is secured or unsecured, secured credit cards have an edge over unsecured cards for the following reasons:
See Also: Different Types Of Credit Cards
Although the advantages of secured credit cards over unsecured cards are mentioned above, it is not necessary for everyone who is applying for a credit card to apply for a secured card. Both types of credit facilities are designed to cater to different requirements. Make sure you review your requirements and eligibility before opting for one.
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