Get Instant Credit and enjoy flexibility with Credit Card Against Your Fixed Deposit

Over the years, whenever you have sought financial advice from your parents or anyone belonging to their age group, their prompt response would have been:  

“Beta Fixed Deposit Kara Le.”  

You would think the advice would be very typical and might shrug it off at first. However, from a practical standpoint, this advice is solid, as it can help you build a strong foundation for managing any financial situation.  

Furthermore, besides being an incredible investment option, a Fixed Deposit (FD) can pave the way for you to get a credit card. FD-backed credit card options are worth exploring for the variety of benefits they offer.  

More about the FD-backed credit card 

When you apply for a regular credit card, the bank considers multiple eligibility criteria and checks related documentation. Here, two common requirements are, a credit score and proof of income.  

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After successfully establishing eligibility and completing the necessary documentation, they determine whether to approve your credit card application. However, when you apply for a credit card linked to your FD, the bank evaluates the FD-related factors and other financial parameters to decide on card approval.  

Therefore, holding an FD with the bank is a prerequisite if you wish to apply for an FD-backed credit card. Typically, banks offer a credit limit of 80-100% of the FD value, though the exact amount varies by the bank’s internal policy and individual case. Furthermore, banks require you to maintain an FD of at least a specified minimum amount to be eligible for the credit card facility. 

The minimum amount varies by bank and the card variant you choose. For instance, IDFC FIRST Bank offers a wide range of FD-backed credit cards, including FIRST WOW!, WOW! Black, FIRST EARN and more. If you choose the FIRST EARN credit card, it requires you to open an FD of at least ₹5,000 to apply for the FIRST EARN FD-backed credit card. 

Benefits of FD-backed credit card  

Whether you need to make a purchase or complete a transaction to fulfil a dream, or navigate an emergency, having a credit card in your wallet enables you to handle it all within minutes. If you are struggling to obtain a card due to limited credit history or insufficient proof of income, an FD-backed credit card can help.  

All you need to do is complete a simple application, which can be submitted online via the bank’s website or app, or in person at the nearest branch. On successful completion of all formalities, the bank will decide on card approval. Once approved, your card will be delivered to your doorstep within a few working days.  

When a financial need arises, whether to fulfil a desire or address an emergency, the first instinct is to use your savings and investments.  

However, always remember that building your savings and investment portfolio takes time, and once depleted, it can take several years to rebuild.  

In situations like these, applying for an FD-backed credit card is a win-win option. It allows you instant access to formal credit while keeping your investment intact.  

Interest rates are the primary consideration when investing or borrowing funds. The FD-backed credit card was designed with exactly this in mind. Leading banks in India, such as IDFC First Bank, offer competitive interest rates on both FDs and credit cards.  

This means you earn an attractive rate on your FD, allowing your money to grow, while paying a fair interest rate on the credit card, making repayments affordable.  

Summing It Up 

A Fixed Deposit is a versatile financial tool that allows a lumpsum amount to grow at a competitive interest rate while also unlocking access to credit options. Banks offer an FD-backed credit card based on the FD investment you hold with them. Your credit limit is determined based on the value of your FD. Use an FD credit card responsibly to ensure financial well-being and build a strong credit score for the future. 

(Disclaimer: This is a sponsored article. It does not have any involvement of the Firstpost editorial team and Firstpost claims no responsibility for its content.)