What are the benefits of having a credit card against a fixed deposit?

A credit card against a fixed deposit (FD) is a secured credit card, which means that the credit limit is backed by your fixed deposit. This type of credit card is a good option for people who have a low credit score or no credit history, as it can be easier to get approved for than an unsecured credit card.

Here are some of the benefits of having a credit card against a fixed deposit:

• Easy to get approved. As the credit limit is backed by your fixed deposit, banks are more likely to approve you for a credit card against an FD even if you have a low credit score or no credit history.
• No income proof required. Banks typically do not require income proof for credit cards against FDs. This makes them a good option for students, homemakers, and others who may not have a regular source of income.
• Lower interest rates. The interest rates on credit cards against FDs are generally lower than the interest rates on unsecured credit cards. This is because the bank has less risk, as your fixed deposit acts as collateral.
• Continue to earn interest on your FD. Even though you are using your FD as collateral for the credit card, you will still earn interest on the FD amount.
• Helps build your credit score. Using your credit card responsibly and paying your bills on time will help you build a good credit score. This can be helpful in the future when you apply for loans or credit cards.
• Income proof not required:  Customers can get a credit card without providing any income proof. Besides working professionals, this is useful for homemakers, students, and freelancers among others.
• Helps build credit history: Using your credit card regularly and paying off the outstanding dues on time will help create a good credit history and credit score.
• Earn interest on fixed deposit: Cardholders continue to earn interest on their fixed deposits, while enjoying free credit for up to 48 days.

However, there are also some drawbacks to consider before applying for a credit card against a fixed deposit:

• Lower credit limit. The credit limit on a credit card against an FD is typically lower than the credit limit on an unsecured credit card. This is because the bank has less risk with an unsecured credit card.
• Early repayment charges. Some banks may charge early repayment charges if you repay your credit card balance within a certain period of time.
• Risk of losing your FD. If you default on your credit card payments, the bank may seize your fixed deposit to recover the outstanding amount.

Overall, a credit card against a fixed deposit can be a good option for people who are looking to build their credit score or who have a low credit score or no credit history. However, it is important to weigh the benefits and drawbacks before applying for one.