Credit cards have become popular, but not all credit card issuers give credit cards easily to people with low credit scores. An FD credit card solves this problem and lets you enjoy credit card features by putting up collateral.
Applicants with low credit scores or no credit history, inadequate income, job constraints, etc., usually need help in getting approved for credit cards. Secured credit cards are an excellent option for such individuals.
Such credit cards allow you to earn interest on your fixed deposit and give you the flexibility to increase the credit limit. But, they also come with liabilities like interest on non-payment and crossing credit limits.
Suppose you default on payments of your secured credit card. In that case, you can face penalties like losing your fixed deposit or a negative impact on your credit score.
6 Important Features of Secured Credit Cards
From instant approval to lower fees, there are many benefits to owning an FD credit card. Check them out here.
- Easy Approval Of Credit Card: This credit card gets approved quickly and requires less documentation. Unlike unsecured credit cards, you do not need documents like income proof and credit history. The bank usually has your personal details from when you open the FD account.
- No Annual Fees or Low Fees: You will also enjoy lower interest rates, cash withdrawal and late payment fees. Most secured cards have no joining and annual fees, making them even more lucrative options. You can save a lot of money thanks to low charges.
- Flexibility To Change Credit Limit: The credit limit offered on a secured credit card is usually 80%-90% of the amount deposited as FD in the bank. You can change your credit limit by adding to the invested amount deposited in the bank. This flexible nature gives you the opportunity to manage your finances according to your lifestyle requirements.
- Safety: FDs have always been considered one of the safest options to keep money in the bank. They generate money through interest and can be used to apply for credit cards without any risk. This way, you can combine investing with getting a credit card to build your credit profile and history.
- Make More Money: You can earn interest on your FD and use the FD amount as available credit on the card. It will continue to give you interest till it matures. This increases your purchase power as you can earn interest and get access to credit. This way you can finance all your goals and obligations.
- Build Your Credit Score: You can pay your bills on time and build a healthier credit history with this card. If you are making a big purchase, you can convert your dues into easy EMIs and pay later. These features help you reduce pressure on your finances while helping you boost your score.
Differences Between Secured And Regular Credit Cards
Let’s look at key differences between these two main kinds of cards so you can choose the right one for yourself.
| Features | Secured Credit Card | Regular Credit Card |
| Security | Needed | Not needed |
| Card Limit | Based on your FD amount | Based on your income and creditworthiness |
| Online Application | Yes | Yes |
| Minimum Credit Score | Not needed | Required to be above 700 in general |
| Eligibility Terms | Easy to meet | Strict terms, depending on the card |
| Interest rates | Low finance charges | Higher rates of 30% or more |
| Annual and Joining Fee | May apply | May apply |
| Rewards | Yes, but may be limited compared to regular cards | Yes, and may be more than secured loan |
Eligibility Criteria To Keep In Mind
Usually, secured cards do not require you to be creditworthy or cross a minimum income threshold. Here are the general terms that apply:
- You should be a resident of India
- You must be 18 years old at least
- Your FD must be for a minimum duration of 6 months
- You have to create an FD account with the credit card issuing bank
- Your FD must not be marked for any other purpose but be exclusively meant for your credit card
Credit Limit On Your Secured Credit Card
The credit limit you get is a proportion of your FD amount in the bank, i.e. usually 70%-90%. Most of the banks give an option of using it indefinitely as long as you pay your bills on time. When choosing a card, go for a bank offering a higher proportion so you can enjoy more spending power.
If you are unable to get an unsecured credit card easily, you can apply credit card backed by an FD. It is a great option if you want to get credit card benefits along with interest earnings. You can further get the lowest interest rates and gradually improve your credit score.
Get a credit limit of 100% of your FD with the popular One Credit Card. Its FD-backed variant allows you to earn an interest rate of up to 7.50% on your FD. What’s more, you can activate your credit card instantly once you apply.
Another perk is that you can track your monthly transactions on the One Credit Card App and manage your finances like a pro. Great offers on food, dining, entertainment, education, travel, utility bills, and more further add value to your wallet. So, what are you waiting for? Apply credit card to get a credit card against an FD and enjoy swiping.
