Individuals have become credit hungry as they spend heavily by shopping online – buying expensive gadgets, clothes, accessories and many others. And this addicted behavior has become a profit making machine for the companies and they are ready to offer cards to individuals by luring them with reward points, zero joining and annual fees. However not every individual can get a credit card as the companies take a very cautious approach before approving card to an individual. And they do this in order to judge the applicant’s repayment ability by verifying their annual income, credit history and past/current loan repayment history.
If due to certain reasons, the card company rejects the application then it doesn’t mean that the doors are closed for you. The solution is to apply for credit card against fixed deposit which requires an individual to have a fixed deposit account with the bank for a pre-determined duration and also deposit minimum amount in the account. These cards are also called as secured credit card. This is because FD is kept as a guarantee with the bank.
Almost all leading Indian banks such as ICICI, Axis Bank, Kotak Mahindra, HDFC Bank and others offer credit card against FD.
Here is the list of banks offering these secured card or credit cards against FD:
|Bank Name||Credit Card Name||Minimum Fixed Deposit Amount Required||Credit Limit Offered||Minimum FD Tenure|
|Kotak Mahindra Bank (ING Vysya Bank)||Solaris Credit Card||Rs. 25,000||Upto 80% of the fixed deposit amount||NA|
|Kotak Mahindra Bank (ING Vysya Bank)||Galaxia Credit Card||Rs. 1,00,000||Upto 80% of the fixed deposit amount||NA|
|ICICI Bank||Coral Credit Card||Rs. 20,000||85% of the fixed deposit amount||180 days|
|Andhra Bank||Signature Card||Rs. 10,000||Upto 75% of the fixed deposit amount||NA|
|Bank of Baroda||BOB Cards Assure||Rs. 25,000||Upto 80% of the fixed deposit amount||NA|
|Axis Bank||Insta Easy Credit Card||Rs. 20,000||Upto 80% of the fixed deposit amount||NA|
|State Bank of India||Advantage Plus Card||NA||85% of the fixed deposit amount||NA|
|State Bank of India||Student Plus Advantage||NA||NA||NA|
|State Bank of India||Advantage Gold||NA||NA||NA|
|HDFC Bank||Business Platinum||NA||NA||NA|
|HDFC Bank||Business Gold||NA||NA||NA|
|Central Bank||Aspire||Rs. 16,000||Upto 80% of the fixed deposit amount||NA|
In the above table wherever NA is displayed, please contact respective bank. Details could not be made available for these cards. However minimum FD amount for banks is not very high and is less than Rs. 50,000.
Benefits of Secured Credit Card:
- No income proof required: In order to avail credit card against fixed deposit, no annual income proof or Income tax return documents are required by the lender. So this is a good opportunity for self employed or low income individuals or those who do not have regular income to start building credit. Read more about how low income earners can avail credit card in India.
- Credit history is not checked: If you have a poor credit history you can start building the same. This will help you in future, when you apply for any kind of a loan/credit card. Check out credit card for first timers in India.
- Rewards point or cash back offers which are normally offered on normal cards are also offered by few banks.
- Individual will continue to earn interest even when credit card against FD is taken.
- Building credit history: A good repayment history will help in building credit history which in long run help in seeking any type of credit (loan or credit card).
- Minimum documentation: Since card is issued against already existing FD, there is not much documentation requirement. Otherwise when you apply for a card, the documentation work is tedious.
- Interest free period is normally higher compared to a regular card.
- No worry of reminder calls or recovery agents, as the outstanding payment will be deducted from your FD account. However never avoid delayed payments as it badly impacts your credit score.
- Cards from few banks also provide personal accident death coverage, insurance coverage against fraudulent transactions, cash withdrawal option, fuel surcharge waiver, and others.
- Once you have this card and use it efficiently (i.e. repayment on time and fully) then you can also apply for supplementary card for your family members.
Disadvantages of Card against FD:
- Your money gets locked.
- If you fail to make payment, money is deducted from your FD account. So whenever you wish to withdraw the FD, only the balance amount is refunded.
- Moreover failure to repay dues will further hurt your credit score.
- Benefits offered on such cards such as add-on cards, loan facility, insurance are not applicable or are less compared to normal cards offered by the banks.
Who should apply for such secured credit card?
Although anyone with FD account can apply for the card, it is best recommended for following categories of individuals:
- Low salaried
- Working in small companies
- Individuals residing in areas blacklisted by the banks
- With no or poor credit history
- Retired senior person