To get a credit card, customers need to earn a minimum amount of salary annually and also have a decent credit score. This makes it difficult for people with low or no credit score and low salaries to get a credit card. Customers with low/no credit score and salary can now easily get a secured credit card.
A secured credit card is given by banks against fixed deposit. ICICI, SBI, Axis, etc., are some of the banks that offer credit cards against fixed deposit in India. When customers apply for such cards, all the other factors that lead to the approval of a card becomes insignificant because card providers are given a collateral security. This security ensures them that they will get the money they provide as credit back. The credit limit of the customers in this case is decided based on the amount of fixed deposit they have.
Some other factors that affect the issuance of such cards are:
Credit Cards against Fixed Deposit are best for:
The process of getting a credit card against fixed deposit is very simple. To avail such card, you have to first open a fixed deposit account with the bank, which offers this type of card. Most banks require you to have at least Rs.20,000 in your fixed deposit account to apply for this card. If you already have a fixed deposit account with the bank with the required funds, you do not have to open another one. The bank in that case will accept the existing FD as security.
Once the fixed deposit account is opened, you have to simple apply for the card and get your application approved by the bank.
When you take a secured credit card against fixed deposit (FD), it won’t affect your FD and you will keep earning interest on it. The rate of interest that you earn will be the same that your bank had set when you had opened your FD account.
The impact of the credit card will be seen at the time of bill payment. In case of you default on your card payment, then the bank will adjust the outstanding amount against your FD account. So, if you want to not hurt your investment, you will have to make sure that you always pay your credit card bills on time.
People who opt for a credit card against fixed deposit primarily to build their credit score will face a problem if they default on their repayment. In such a case, not only will their FD be affected, but it will also have a negative impact on their credit score.
Apart from this, in case of financial emergencies, you do not have to pre-close your FD account immediately, instead you can use your secured credit card to make the payment. As banks offer sufficient time in the form of interest free credit period to cardholders, they get time to repay the bills.
Some of the banks that offer credit card against fixed deposits in India are:
ICICI Bank Coral Credit card Against Fixed Deposit is offered to customers without any income related documents.
Advantage Plus Credit Card is issued against fixed deposits by the State Bank of India. The maximum cash withdrawal limit on this card is 100% of the credit limit.
Axis Bank Insta Easy Credit Card is issued by the bank against fixed deposits. The credit limit on this card is up to 80% of the FD amount.
Aspire Credit Card is issued against fixed deposits by Central Bank of India. The credit limit available on the card will be 80% of the fixed deposit amount. Interest charged per month on this credit card is 1.20%.
Aqua Gold Credit Card is issued against fixed deposits by Kotak Mahindra Bank. The minimum deposit that is to be made in the fixed deposit account is Rs.25,000 and cardholders can avail a credit limit of up to 80% of the fixed deposit amount.
Bank of Baroda Assure Credit Card is an international Visa card that is offered against fixed deposit. The credit limit on this is card is 80% of the fixed deposit amount.
The State Bank of India (SBI) is now issuing credit cards to individuals who have Rs.25,000 or more in fixed deposits, regardless of which bank the fixed deposit is held with. The credit card will be provided to individuals free of charge and the applicant will not require to produce a proof of income. The bank has also made a decision to provide these credit cards to students from the top 100 educational institutions in India without the student needing to furnish a proof of income. This move has come in light of the bank installing an additional 5 lakh swipe machines across the country. The bank is also developing an app to facilitate offline payments through the card via a QR code. The credit cards against fixed deposits are set to be issued from the beginning of January, 2017 and the student credit cards were made available at the beginning of December, 2016.
21st December 2016