Need credit without a steady income proof? Or maybe you are looking for ways to improve your CIBIL score. The ideal solution to both is a credit card against a fixed deposit. This is also called a secured credit card because your FD acts as collateral. This is the reason banks and card issuing companies can quickly approve these credit cards. Read on to find answers to the most common questions about taking a credit card on a fixed deposit.
On this page
- What is the minimum FD amount for a secured credit card?
- What is the credit limit of a credit card against FD?
- What is the minimum FD tenure to have a secured credit card?
- Do I need to have a high income to get a secured credit card?
- Do I need a high credit score to get a secured credit card?
- How can I apply for a credit card against FD?
- What documents are needed for the application?
- For whom is a secured credit card most suitable?
- Is an interest-free period available with a credit card against FD?
- Can a secured credit card limit be increased?
- What happens to a secured credit card when the FD is closed?
What is the minimum FD amount for a secured credit card?
The minimum fixed deposit amount required to apply for a secured credit card differs from one card issuer to another. This amount is kept low to make the credit card against FD affordable and accessible to many people, irrespective of their income level and credit history.
What is the credit limit of a credit card against FD?
A bank sets a specific percentage of the FD amount as your credit card limit. This percentage also varies from one card issuer to another. Usually, you can get 75% to 85% of the fixed deposit amount as your card’s credit limit. Therefore, the higher your fixed deposit amount, the greater the card limit.
What is the minimum FD tenure to have a secured credit card?
The minimum FD tenure depends on the policies of the bank or card issuer. Generally, this tenure is short so people can access this facility even if they cannot commit to holding a fixed deposit for a long time. You can find a bank that offers its secured credit card against FDs with a minimum tenure of just 6 months.
Do I need to have a high income to get a secured credit card?
No. You don’t need any income to be eligible for a credit card against a fixed deposit. This is because the expenses made on this card are secured with the amount you have deposited in your FD. If you do not make the bill payment for the credit card, the card issuer or bank has the legal right to break your FD to recover the money. Before taking such a step, the bank or card issuer will communicate with you.
Do I need a high credit score to get a secured credit card?
No. You don’t need a high credit score. In fact, many people use a credit card against a fixed deposit to improve their credit score before taking a home loan or car loan.
How can I apply for a credit card against FD?
Ans: The application procedure depends on whether you already have an FD account. Here is how you can apply for a credit card on a fixed deposit:
For Non-FD Account Holders: If you don’t have a fixed deposit, you need to open one. Once the account is active, you can apply for the credit card online on the bank’s website or mobile app.
For FD Account Holders: If you already have an FD, simply apply for the credit card online on the bank’s website or mobile app. Alternatively, you can call your relationship manager and ask for help with the application.
What documents are needed for the application?
You will need your FD certificates against which the credit card is given. The paperwork is minimal since you already have an FD with the bank.
For whom is a secured credit card most suitable?
A credit card against a fixed deposit is suitable for people who:
- Have little to no credit history
- Have a low credit score
- Don’t meet the income criteria to qualify for a regular or unsecured credit card
- Have just begun to earn and don’t have proof of income
- Live in blacklisted region of the country
- Work in organisations blacklisted by lenders
Is an interest-free period available with a credit card against FD?
Ans: Yes. You can get an interest-free period between 48 to 55 days with a credit card on a fixed deposit.
Can a secured credit card limit be increased?
Yes. You can increase the limit of a credit card against a fixed deposit by adding more money to your FD account.
What happens to a secured credit card when the FD is closed?
You need to close the credit card before closing your FD because the card is linked to the fixed deposit.
Will my FD continue earning interest even if I use the credit card?
Yes, you will continue to earn interest on your FD. The interest will be disbursed as per your instructions (monthly, quarterly, or added to the deposit).
What tax treatment applies for a fixed deposit used to get a credit card?
The interest you earn on your FD is taxable according to your income tax slab.
A credit card against FD is easy to qualify for and pay off since the credit limit is low. Apply for such a credit card online to build or improve your credit score for easy eligibility for home, car and other big loans in the future.
