Getting a credit card has never been this easier before. Now banks like ICICI, Axis, SBI and such others are issuing credit cards against the fixed deposit accounts opened with them. This new idea is formulating in the market virally as the banks aggressively marketing this product in the market with a new enthusiasm. There are so many features attached to this deal that will help you decide if this is ideal for you or not. You need just an existing or new fixed deposit with a bank to have credit card of that particular bank. The deposit amount should be more than Rs. 20,000 and less than Rs. 25 lakh. You just have to remember that your credit card limit will be 80-85 percent on the deposit amount. With this the bank will be able to secure itself in handing you any kind of money and can enjoy a margin of security.
With quick processing and less complication while getting a card for you is an advantage that a customer enjoys. Even the documentation that you need to produce to the bank is minimum which turn makes the process faster and easier for both, bank and the customer. That maximum period of the fixed deposit should be more than 180 days and a lien will be marked against this fixed deposit. It would continue as normal fixed deposit and will regularly earn interest. If there will be a delay in making any credit card payments and same will be made good from your fixed deposit account. In this the bank is secure as there is a specified limit on the card and the bank will have its exposure completely covered.
The most important thing about this whole thing is that you don’t have to show your income limit to the bank and you can simply get a credit card by simply depositing minimum of Rs. 20,000 in your fixed deposit account. So there is no need for meeting the expected income bar of the bank for the bank to issue you a credit card at all. This can make things easier for the customers who are in the beginning of their career. Even in the case of debt overload you can be the owner of your own credit card. If you already have few loans running on your account banks may not be so excited about giving you another loan in the form of a credit card. But with a fixed deposit you can easily get a card for sure without much of complications. So even if your repayments behavior has been a bit bumpy still you can be carefree about the repayments if your card is against the fixed deposit.
If there arises any medical emergency, you can have benefits if your card is linked to your fixed deposit. For one you wont have to worry about foreclose your deposit and it will continue to earn interest as you can use your credit card with ease. Another benefit related to this is that you get 48-55 windows for making interest free payments of your card. So you get time to arrange liquidity for your payments through other means on time. It also comes helpful if you have lost your job, your credit card can lend you duration of 48-55 days for arranging the liquidity without closing you fixed deposit account in such emergency cases.
All this is for one purpose and one purpose only, that is to put a check on the reckless spending of the people with a specified amount to look forward too. The summary being, it is beneficial in all sense, short term as well as long. In short term it would affect your liquidity and in long term it would help in asset allocation process. All in all it can be a good idea to have a credit card against your fixed deposit account. So, if you are debt overload or have been denied a credit card you can always go for fixed deposit linked route.