A secured credit card, also known as a Credit Card Against FD, is becoming increasingly popular among cardholders. This credit card has your fixed deposit (FD) as a security and offers various benefits. Many banks, including Kotak811, have started providing this feature due to its rising demand and popularity. In the below article, we will explore the advantages of having a credit card against FD and how it works.
The Major Difference Between an Unsecured Credit Card and a Credit Card Against FD
- Unsecured Credit Cards: These credit cards are issued without any collateral. They come with high fees and require applicants to meet strict eligibility criteria, including a good credit score and a steady income.
- Credit Card Against FD: This is a secured credit card, lien-marked against a fixed deposit held by the issuing bank. It is easier to obtain, especially for those with low income or poor credit history, as it requires less stringent eligibility criteria.
Who Should Consider a Credit Card Against FD?
This type of credit card is suitable for people who:
- Need a reliable credit card but face difficulties in getting one due to low income or lack of a regular income source.
- Have a poor credit history and are looking to rebuild their credit score.
- Are freelancers, homemakers, or have just started a new job with a low income.
Features of a Credit Card Against FD
- Collateral: The credit card is a lien marked against a fixed deposit.
- Credit Limit: The credit limit is up to 90% of the FD amount.
- Low Documentation: Very few documents are required to apply for this card.
- Short Tenure: The minimum tenure of the fixed deposit should be six months.
- Interest-Free Period: Banks usually offer an interest-free period of 48 to 55 days.
In the event of default, the bank can settle missed or late payments by redeeming the lien-marked fixed deposit. However, the bank will notify the cardholder before taking such a step.
Benefits of a Credit Card Against FD
- Affordable FD Amount: The minimum fixed deposit required is usually between Rs.10,000 – Rs.20,000, making it accessible to more people.
- Earn Interest: The lien-marked FD continues to earn interest.
- Rewards: Cardholders can enjoy cashback, reward points, and other benefits.
- Improved Credit Score: Regular use and timely payments help improve the credit score.
- Interest-Free Duration: Enjoy an interest-free period of 48 to 55 days.
- Personalised Credit Limit: The credit limit is determined by the FD amount, offering flexibility based on your deposit.
How to Use a Credit Card Against FD
Understanding how to use a credit card effectively is essential for maximising its benefits:
- Regular Payments: Ensure timely payments to avoid penalties and improve your credit score.
- Monitor Spending: Keep track of your expenses to stay within your credit limit.
- Utilise Rewards: Take advantage of cashback, reward points, and other offers provided on the card.
Application Process
- Non-FD Account Holders: You need to open a fixed deposit account with the bank. Once the FD account is active, you can apply for the credit card online.
- FD Account Holders: If you already have an FD account, you can apply for the card directly through the bank’s website.
Documents Required
- Existing FD Holders: No additional identification or residence proof documents are required. The bank will use the proofs provided during the FD account opening.
- New FD Applicants: New applicants should provide proof of identification and residence to open a fixed deposit account.
Why Choose Kotak811?
Kotak811 offers a seamless application process and attractive benefits for their Credit Card Against FD to its customers. With features like low documentation, personalised credit limits, and the ability to earn interest on your fixed deposit, it stands out as a convenient and efficient option.
Conclusion
Applying for a credit card against FD in Kotak811 is the smart choice if you need a credit card but may not meet the criteria for an unsecured card. It offers a secure and easy way to build or rebuild credit while enjoying the benefits of a credit card. Always read the terms and conditions carefully and consider reviews before applying.
