Low Credit Score? FD-Backed Card Offers EMI Facility And Easy Approval | Banking and Finance News

Over 10 crore people in India use credit cards.

Getting a credit card is often difficult for people with no credit history or a low credit score. To make the process easier, many banks have started offering FD-backed credit cards. These cards are issued against a fixed deposit (FD), which acts as a security for the bank.

In this system, the bank keeps your FD as a guarantee and gives you a credit card with a limit usually between 75% and 90% of the FD amount. If the user pays the credit card bills on time, it helps in building or improving their credit score. Along with this, users can also get benefits like reward points, cashback and discounts.

EMI Option

An FD-backed credit card also proves helpful in emergencies. Even if money is needed suddenly, the FD remains safe and continues to earn interest. Many banks allow users to convert large purchases into EMIs. Since the bank already has the FD as security, there is almost no possibility of the card application being rejected.

Who Should Choose This Card?

This type of credit card is considered a better option for students, homemakers and people applying for a credit card for the first time. It is also useful for those whose card application has been rejected earlier or whose credit score is weak.

Frequently Asked Questions

Q: Can I withdraw the FD after getting this card?

A: No. The fixed deposit cannot be withdrawn until the credit card is closed or all dues are cleared. However, interest on the FD continues to be added.

Q: What if I fail to make the payment?

A: In such cases, the bank deducts the outstanding amount directly from the fixed deposit.

Q: Is the interest rate lower than regular credit cards?

A: The interest rate is almost the same as a normal credit card. The only difference is that approval is easier and the risk involved is lower for both the bank and the customer.