For a lot of younger people who have no credit score, as well as for a lot of people who suffered a rough patch that reflected in their credit profile, getting hold of a regular credit card might be difficult. Most credit card issuers are reluctant to issue credit cards to such people.
But this does not mean that one has to be deprived of the benefits of a credit card. Today, you can get hold of some of the best credit cards in the country against your fixed deposit. These credit cards are known as secured credit cards.
How does a secured credit card work?
Secured credit cards are issued to people in exchange for a fixed deposit made by them. The fixed deposit is collateral that acts as security for the bank, in case the cardholder fails to make the payment. Apart from the fixed deposit acting as collateral, everything else about secured credit cards is the same as your regular credit cards.
Who should get a secured credit card?
Most people who have a poor credit score or no credit score at all have a hard time getting approved for credit cards. In such cases, secured credit cards are lifesavers. In this case, you can make a deposit of a fixed amount to get access to a credit card. The credit card issuers also run a lesser risk of losing money since they are already backed by collateral.
Advantages of applying for a credit card against FD
Secured credit cards have a number of advantages over regular credit cards.
- They have lower interest rates in comparison to unsecured cards.
- Secured credit cards are great entry-level credit cards, especially for students since they can be used to build a good credit score. If you pay your secured credit card bills on time, you’re very likely to put up a good credit score in a short period of time. This will make you eligible for loans and credit cards in the future.
Drawbacks of a secured credit card
With every credit card that a bank approves, they are taking a huge financial risk. The case with most secured credit cards is that the cardholders have a poor credit history. Thus, the banks often issue a much lower credit limit to be on the safer side. Secured credit cards also charge a slightly higher annual fee than regular credit cards.
Should you apply for a credit card against your fixed deposit?
Secured credit cards are a safe bet for most students and newbies because they are a great way for them to establish a good credit profile that will be beneficial in the future. Additionally, they are also good for people who don’t have a good enough score for a credit card but need one. All in all, for a nominal amount that you have to deposit as collateral, secured credit cards do offer a wide range of benefits that could come in handy.
Best secured credit cards in India
- Bajaj Finserv RBL Bank Freedom SuperCard: These cards come with the power of four cards in one, and require the cardholder to book an FD for Rs. 25,000 or more. Additionally, 100 percent of the amount booked will be issued as the credit limit.
- Kotak Mahindra Aqua Gold Credit Card: It provides a credit limit of up to 80% of the collateral amount. It also offers attractive reward points and cashbacks.
- SBI Unnati Credit Card: One only has to deposit a fixed amount of Rs. 25,000 to get access to this card. It also has a fee waiver for the first 4 years.
- Axis Bank Insta Easy Credit Card: This is a great secured credit card that requires you to submit an FD of Rs. 20,000 at least.
- ICICI Instant Platinum Credit Card: This secured card from ICICI Bank is issued upon opening an FD account with at least Rs. 20,000. Additionally, there are no annual fees that are charged either.
Apply now and get instant approval for the Bajaj Finserv RBL Bank Freedom SuperCard, one of the best secured cards available. The card allows users to avail a personal loan in cases of emergencies, and also lets you withdraw cash from ATMs at zero interest for up to 50 days.