Fixed deposits (FDs) have long been popular for Indians looking to save money and earn interest on their savings. However, can you also use your FDs to get a Credit Card? That’s right, FD Credit Cards are a thing, and they offer a unique set of benefits that can help you take your financial management to the next level. Let’s explore what FD Credit Cards are, how they work, and how they can help you achieve your financial goals.
What is an FD Credit Card?
An FD Credit Card is a type of Credit Card linked to a fixed deposit account. When you apply for a Fixed deposit Credit Card, the bank issues you a Credit Card, and the credit limit on the card is determined by the amount you have in your FD account. The credit limit is usually a percentage of the FD amount, typically up to 90%. If you have a fixed deposit of Rs 1 Lakh, you could get a credit limit of up to Rs 90,000 on your Credit Card.
How Does an FD Credit Card Work?
To understand how a Fixed deposit Credit Card works, let’s first consider how a regular Credit Card works. A regular Credit Card gives you a credit limit, which you can use to make purchases, pay bills, or withdraw cash. You then receive a monthly statement showing your outstanding balance and the minimum payment due.
An FD Credit Card works similarly, except the credit limit is linked to your fixed deposit account. When you use your FD Credit Card, the bank deducts the amount you spend from your available credit limit. For example, if your credit limit is Rs 90,000 and you spend Rs 10,000, your available credit limit would be reduced to Rs 80,000.
The twist with an FD Credit Card is your credit limit is dynamically adjusted based on the balance in your FD account. If you deposit more funds into your FD account, your credit limit increases accordingly. Conversely, your credit limit decreases if you withdraw funds from your FD account.
Must-Know Benefits of an FD Credit Card
There are several benefits to using a Fixed deposit Credit Card. Here are some of the most significant advantages:
- Low-Interest Rate: FD Credit Cards typically have lower interest rates than regular Credit Cards. This means you’ll save money on interest charges when you carry a balance on your card.
- Higher Credit Limit: Since an FD Credit Card is secured against your FD account, you may be eligible for a higher credit limit than you would be with a regular Credit Card. This can be especially helpful if you must make a large purchase or pay an unexpected expense.
- No Hidden Charges: FD Credit Cards usually don’t come with hidden fees or charges, making them a cost-effective option for managing your finances.
- Easy Approval: Because an FD Credit Card is secured against your FD account, getting approved for one is often easier than getting a regular Credit Card. This makes it a great option for people who may not have an established credit history or who have had credit issues.
- Build Your Credit Score: Using an FD Credit Card responsibly can help you build your credit score over time. This can be especially helpful if you’re working to improve your credit rating or establish credit for the first time. By choosing this card, you can enjoy features like credit score tracking and alerts, helping you stay on top of your credit health.
A Fixed Deposit (FD) Credit Card is a practical financial tool that combines a fixed deposit’s reliability with a Credit Card’s flexibility. This financial product promotes responsible credit usage and can be a great starting point for individuals looking to establish or rebuild their credit history. Using the fixed deposit as security, users can access a credit limit based on their deposit amount, encouraging financial discipline. This unique connection between fixed deposits and Credit Cards offers a solution for those managing credit complexities. What’s more, the FD Credit Card can help foster responsible financial habits by assisting users in balancing credit utilisation with the assurance of a fixed deposit. The FD Credit Card integrates traditional banking principles with modern credit solutions, addressing various consumer needs. As financial landscapes change, the FD Credit Card provides a reliable and flexible option to help users manage their finances effectively.
Hey, this is Johny Sehgal. I am the owner and caretaker at Finance Jungle. I completed my education in BSC and now heading towards the digital marketing industry. I usually have interests in reading, playing games and watching movies. I also love to write content based on quality information. The main motive of mine is to provide the top and best quality information to my readers. Finance Jungle is the blog for the same.