20 Questions You Always Wanted to Ask about Credit Cards against FD
Looking to apply for a credit card against FD? Check out these questions to solve all your queries related to credit card against FD or secured credit card.
1.What is a credit card against fixed deposit (FD) or secured credit card?
Credit card against fixed deposit (FD) or secured credit card is a credit card against a collateral such as Fixed Deposit (FD). Financial institutions have different minimum FD amount to apply for secured credit card. Individuals can book an FD starting from Rs.15,000 to get a credit card against a fixed deposit.
2.How does a secured credit card work?
Financial institutions such as banks issue secured credit card against a fixed deposit. They link the FD to the secured credit card. The FD is automatically renewed till closure. This lets you to use your secured credit card with no issue. As it offers a secured credit card against FD, credit score or income has lower significance. Credit card against FD can also help to build credit history and improve credit score.
The deposit amount in the fixed deposit will continue to earn the prevailing rate of interest.
3.What are the benefits of a secured credit card?
4.Can you get turned down for a secured credit card?
The probability of getting turned down for a secured credit card is slim. You may get turned down because of internal bank policies and past records.
5.Will a secured card build credit history?
A secured credit card is an easy option to build credit history. Getting the card, using it regularly, keeping the credit card utilisation ratio low and paying the dues on time are some ways that can help to build credit history within a few months.
6.What are the best secured credit cards to rebuild credit?
Few banks offer secured credit card to their customers. Here are some of the best credit cards against fixed deposit:
7.Do I need a job to get a secured credit card?
You don’t need a job to get a secured credit card. Students, homemakers and business owners are also eligible to apply a credit card against FD.
8.How do I qualify for a secured credit card?
You can qualify for a secured credit card by booking an FD of the minimum required amount. Banks offer online application of secured credit card during the FD opening process.
9.Is getting a secured credit card worth it?
If you are a student or recently started working, getting a secured credit card is a good way to build credit history. A good credit score can help you apply for an unsecured credit card with higher credit limit or loan products later.
10.Can I have a two secured credit cards? Is it a good idea?
Yes, you can have two credit cards against FDs. It will increase your total available credit. Having two credit cards can help you keep balance-to-limit ratio of your card low. This can assist you in building a good credit score.
11.What is the highest limit on a secured credit card?
The credit limit of the secured credit card depends on the fixed deposit linked to the credit card. Typically, the credit limit of the card is 80% of the FD amount. However, in case of Kotak Aqua Gold Credit Card, the maximum credit limit of the card is Rs.12 lakhs.
12.Should I close my secured credit card?
If you are looking at closing credit card against FD because you have improved your credit score, you shouldn’t close your secured card till you have new regular credit card.
As the length of your credit history affects credit score, closing your credit card will close your credit line. If your credit card against your FD is a lot older than your other credit products, closing your secured credit card can have an impact on your credit score.
13.What are the differences between secured credit card and regular credit card?
14.Is a secured credit card better than an unsecured credit card?
There is no black and white answer to this question. Secured credit card can be a better option for a person looking to build credit history or repair credit score. However, unsecured credit card may be a better alternative for individuals with a high credit score who want a higher credit limit and perks.
15.What will happen if I don’t pay the dues on the secured credit card?
Your credit score will take a hit if you don’t pay the dues on the secured credit card. If you don’t pay the dues, your bank will adjust the outstanding dues against the linked FD.
16.Can I improve my credit score with a credit card against FD?
Yes, you can improve your credit score by using a credit card against FD. Be sure to use it regularly and pay the dues on time.
17.Can I apply for Credit Card against Fixed Deposit online?
Customers of banks such as Kotak Mahindra Bank and ICICI Bank can apply for a secured credit card online through net banking or mobile banking application.
18.What is the minimum FD amount required to apply for a secured credit card
The minimum FD amount to apply for a secured credit card differs among different financial institutions. The minimum FD amount to apply for a secured credit card starts from Rs.15,000-25,000.
19. How fast will a credit card against FD build credit?
After you have opened your secured credit card, it will take around 30-50 days for the bank to send your report to the credit bureaus. After bank send your payment report to the bureaus, your credit score will start building.
It may require almost 12 months to build a decent credit score.
20. How long should I keep a secured credit card?
Ideally, you should keep a secured credit card for at least 12 months. More than a year of wise use of your credit card, can help you increase your credit score. Check your credit score before closing your secured credit card.
