What is Credit Card against FD?

Credit cards make purchases and payments easy and convenient. Apart from letting you make credit purchases, some credit cards like the Bajaj Finserv RBL Bank SuperCard also offer low-cost emergency loans, interest-free ATM withdrawals, and conversion of purchases into EMIs.

When looking for a credit card, you may have come across the term ‘secured credit card’ too. If you are wondering how different it is from a regular, unsecured credit card, read on to find out.

What is a secured credit card?

A secured credit card is backed by collateral and is offered to customers who have a low credit score or to those who do not have a credit history at all. Financial institutions provide secured credit cards to customers who are looking to build their credit profiles.

One of the popular variants of a secured credit card is a credit card against fixed deposits.

A credit card against FD is issued to a customer in exchange for a fixed deposit that he pledges as a security for the card. Bajaj Finserv also offers a secured credit card in association with RBL Bank.

The credit limit of a secured credit card is decided based on the value of the fixed deposit that a customer is willing to pledge. In most cases, card issuers provide up to 80% of the fixed deposit value as the credit limit. The Bajaj Finserv RBL Bank Freedom SuperCard (secured credit card) provides a limit of up to 100% of the FD amount. So, you have the power of setting your own credit limit on the card.

Features of a credit card against FD

• A credit card against FD is easy to qualify for as issuers require you to submit minimal documentation.
• In order to qualify for this secured credit card, you are required to pledge a fixed deposit that meets the minimum value criterion as prescribed by the financial institution.
• Issuers require you to pledge an FD that has a minimum tenor of 6 months for a credit card.
• The credit limit for a credit card against FD is usually 75% to 85% of the fixed deposit amount.
• Typically, a credit card against FD offers all the usual features such as reward points and cashback.
• Since a credit card against FD has a low credit limit, you can use it to build a good credit score by managing it well. This will help you transition to a regular credit card at competitive terms when your income increases.
• Even though you pledge your fixed deposit as collateral with the credit card issuer, you will still continue earning interest on FD at the applicable rate.

Additional Read: Credit card benefits

How can I get a credit card against FD?

To apply for a credit card against FD, you are required to have a fixed deposit with the issuer. If you already have an FD with the issuer, you can apply by visiting a branch or the issuer’s website.

For the Bajaj Finserv RBL Bank Freedom SuperCard(credit card against FD) you can apply with a 100% limit of the FD amount. As per the process, you would just be required to open a fixed deposit with RBL Bank Ltd and the minimum FD booking amount should be Rs. 25,000.

Which banks provide credit cards against FD?

Currently, only banks are allowed to offer credit cards against FDs in India. However, the Payments Council of India (PCI) has recently suggested that the RBI allow NBFCs to issue credit cards as well.

The Bajaj Finserv RBL Bank Freedom SuperCard is an exclusive offering that gives you the power to choose your credit card limit. To avail this secured card, all you must do is book a fixed deposit worth Rs. 25,000 or more with RBL Bank, and 100% of the amount booked in the FD will be issued as a credit limit on the Freedom SuperCard. You also get additional benefits like the industry best annual interest rate of up to 6.5%* on the FD booked, 75% cash withdrawal limit, a savings bank account with an interest rate of up to 6.75%*, unbeatable offers on grocery purchases, travel bookings, fuel purchases, complimentary airport lounge access and much more.

Who should get a credit card against a fixed deposit?

Given the features of a credit card against FD, this card is extremely suitable if:

• You are a first-jobber
• You have no income proof
• Your credit score is low or you don’t have one
• You are retired and don’t earn a regular income
• You have been denied an unsecured credit card by issuers on other grounds

Are interest rates on secured cards lower?

Since a credit card against a fixed deposit is secured, issuers charge a relatively lower interest rate as compared to unsecured credit cards, as their risk is lower.

Eligibility criteria to apply for a credit card against FD

Though each issuer has its own eligibility terms to secure a credit card against FD, these are the common ones.

• You should be at least 18 years of age
• Your FD’s value and tenor should match the minimum amount and tenor stated by the issuer

Once you start earning an adequate income, you can upgrade to a feature-rich credit card such as a Bajaj Finserv RBL Bank SuperCard. It serves as a 4-in-1 credit card, allowing you to make interest-free ATM withdrawals for up to 50 days and borrow an interest-free emergency loan for up to 90 days. In fact, you can even convert purchases of over Rs. 3,000 into easy EMIs. Benefit from easy eligibility criteria and access these benefits with a SuperCard instantly. Remember to check your pre-approved offer to accelerate the application process further!

Additional Read: All you need to know about the supercard