Credit Cards Against Fixed Deposits: Features, Benefits & Eligibility

Secured credit cards are a great option for individuals with no or poor credit history. These cards help in building or repairing credit over time while offering the convenience of a regular credit card. Here’s a detailed look at secured credit cards, their benefits, and key considerations.

What is a Secured Credit Card?

A secured credit card is issued against a fixed deposit (FD) held with the bank. The credit limit is usually a percentage of the FD amount, typically ranging between 80% to 100%, reducing the bank’s risk and making approval easier.

Key Benefits of Secured Credit Cards

  • Credit Score Improvement: Regular usage and timely payments help in boosting credit scores.
  • Easier Approval: Suitable for individuals with low or no credit history.
  • Interest Earnings on FD: The underlying FD continues to earn interest.
  • Controlled Spending: The credit limit is linked to the FD, reducing the risk of overspending.
  • Access to Credit Facilities: Provides access to credit even without a strong credit profile.

Things to Keep in Mind

  • Timely Payments: Paying on time is crucial for improving your credit score.
  • Credit Utilisation: Keeping credit usage low positively impacts your credit score.
  • Fees and Charges: Be aware of annual fees, late payment penalties, and other charges.

While secured credit cards are useful for credit building, unsecured credit cards offer additional benefits like rewards, cashback, and travel perks. Comparing different credit card options based on your lifestyle and spending habits can help in making a better choice. Responsible usage and timely repayments will enhance creditworthiness, eventually enabling access to better financial products.