Why You Should Get a Credit Card Against FD?

A credit card can be vital for managing expenses and building credit. Still, obtaining one is more challenging than it may seem. Most banks issuing credit cards have strict eligibility criteria. A credit card against a fixed deposit (FD) is handy for those struggling to meet eligibility criteria. This card type is an excellent solution for those needing help getting a traditional credit card. It offers numerous benefits and can be a smart financial move.

This article will explain why using an FD credit card can be wise.

Easy Approval Process

One of the main advantages is the ease of approval. Traditional credit cards require a good credit score and a stable income. On the other hand, this type of card is issued against the security of your fixed deposit, reducing the bank’s risk. Approval gets easier even with a low credit score or irregular income. This accessibility benefits students, new professionals, or anyone with a limited credit history. It ensures that more people have access to the benefits of credit without the usual barriers.

Improves Your Credit Score

Using this type of card responsibly can help improve your credit score. Since getting approval on this card type is more accessible, using it smartly is an opportunity to build or rebuild your credit history. You can gradually enhance your credit score by paying your bills on time and keeping your credit utilization low. Over time, a good credit score can help you qualify for other financial products. Getting personal loans and mortgages on more favourable terms becomes more accessible, making the secured card a practical tool for long-term financial planning.

Lower Interest Rates

An FD credit card often has a lower interest rate than an unsecured credit card. Since the bank holds your FD as collateral, they are willing to offer better terms, saving you money on interest charges, especially if you occasionally carry a balance. Lower interest rates mean you can manage your debt more efficiently and avoid falling into a cycle of high-interest payments. This financial advantage makes the secured card cost-effective for many consumers, particularly those looking to save on interest costs.

Rewards and Benefits

Many cards issued based on fixed deposits offer the same rewards and benefits as regular credit cards. You can earn cashback and reward points and enjoy discounts on various purchases. These perks make using this type of card more attractive and rewarding. Some cards offer exclusive event access, complimentary insurance, and travel benefits, adding extra value to your spending. You can make the most of your everyday purchases by leveraging these rewards, turning your spending into valuable rewards and savings over time.

Credit Limit Based on FD Amount

The credit limit for a secured card is typically linked to your fixed deposit amount, giving you control over your credit limit. The higher your FD, the higher your credit limit will be. This flexibility allows you to manage your spending and credit usage more effectively. It also lets you plan larger purchases or manage emergencies without worrying about exceeding your credit limit. A credit limit matching your financial capacity can help you maintain better discipline and control.

Safety and Security

Having this type of card adds an extra layer of safety and security. The FD is a safety net if you are concerned about overspending or falling into debt. In case of default, the bank can liquidate the FD to recover the outstanding amount, reducing the risk for both parties. This security aspect can provide peace of mind, knowing that your savings back your financial obligations.

Hassle-Free Credit Card PIN Generation

Another advantage is the hassle-free credit card PIN generation process. Setting up and managing your PIN is straightforward and can often be done online or through the bank’s customer service. This convenience ensures that you can start using your card quickly and securely. Many banks also provide the option to reset or change your PIN easily, adding an extra layer of security.

Conclusion

Getting an FD credit card can be an intelligent financial decision. It offers easy approval, lower interest rates, and the chance to build your credit score. This card type provides numerous benefits: rewards, security, and flexibility. Whether you want to improve your credit history or need a backup for emergencies, this credit card is a valuable tool in your financial arsenal. Ensure you use it wisely to reap all its benefits.