4 Ways to Get Credit Card in India: Add-On, Against FD & Others
The demand for credit card in India is on the path of outpacing the debit card. And it has been observed that spends through this form of plastic money has also been very high compared to debit card. Few common reasons for such a trend are:
- You get free money for a certain time. Moreover you also get an option of making minimum payment and sufficient time to pay the money back. And this is what attracts the buyers, the most.
- The enormous growth of eCommerce where credit card is widely accepted
- Income levels have risen, so people are spending heavily
- Reward points, cashback offers, free miles etc.
However not everyone is lucky to get a card. Because lenders now have become very cautious when approving any credit in order to reduce the non-preforming assets for preventing the losses. And to segment such risky individuals, lenders rely on credit score (CIBIL is one such credit rating agency in India) and their own customer database. But this doesn’t mean that once the card is disapproved, you will not get another card.
There are multiple ways to get credit card in India, as follows.
- Direct application: This has traditionally been the most common way used by individuals to get credit card. You just need to contact the bank and apply for the card. You can either apply online or visit bank or request bank send their customer executive. After you apply, bank will then check various parameters such as your previous repayment history, number of card accounts active etc. and then calculate your repayment capacity. Based on statistical calculations, banks will either approve/disapprove your application.
- Add-on or supplementary card: If unfortunately you are not able to get credit card though direct application, then you can still get a card but on your family member’s existing card account. These are called as add-on or supplement card. However the condition is that cards will be issued to family members which includes children, mother/father, spouse. Also there is a cap on the number of cards that can be issued and the credit limit depending on the number of cards issued.
- Against fixed deposit: Another good option to get a credit card is, against FD. It also helps in building credit score especially for the first timers. Advantage is that eligibility criteria are not very stringent and documentation requirement is also bare minimum. Moreover lenders do not take into consideration income, repayment history, etc. However there are certain disadvantages as well such as non-repayment of dues will force bank to debit the money from your FD account. The card limit is typically 80%-85% of the FD amount. Here is the detailed information on such type of card. This linked article also contains the list of banks offering credit cards against FD.
- Pre-approved cards: The above listed ways of getting a card requires individuals to apply on their own. But there is a type of card, which lenders offer to selected individuals. These are called as pre-approved cards. You must have seen many E-mails in your mailbox with subject line similar to “Pre-approved Credit Cards”. Basically banks make such offers in order to win new customers. And the process they follow is by scanning CIBIL database and selecting customers having CIBIL score at an optimum level. However there is a trick here, pre-approved doesn’t guarantee that card will be received. This is because once you apply for such card, the real background verification will be conducted by the card issuer. This mainly includes income check, repayment history amongst others. And if you fail to meet their criteria, the card will be rejected which in turn might hurt your CIBIL score. So be careful while applying for the card. Opt only when your repayment record is good and you carry no debt and most importantly, the benefits of this pre-approved card are better compared to any existing owned card.
Irrespective of the way you get a credit card, it’s wise usage will make you a smart credit user. And will help you get credit especially during bad financial phase of your life.