Getting your credit card application rejected can be frustrating, but it doesn’t have to mean the end of your credit card dreams. An FD-backed credit card, also known as a secured credit card, offers a unique solution for individuals with limited credit history or lower credit scores.
How it Works:
Unlike traditional credit cards, which rely on your creditworthiness, FD-backed cards require you to deposit a fixed deposit (FD) with the bank. This deposit acts as collateral, securing the credit limit offered on the card. Typically, the credit limit is equivalent to a percentage of your FD amount.
Benefits of FD-backed cards:
- Approval, even with limited credit history: Having no or limited credit history can make it challenging to get approved for traditional cards. FD-backed cards offer an alternative path, allowing you to build your credit score with responsible use.
- Enjoy card benefits: Many FD-backed cards offer rewards programs, purchase protection, and other benefits similar to traditional cards.
- Maintain access to your FD: While your FD serves as collateral, you continue to earn interest on it throughout the use of the card.
Examples:
Imagine you’re a recent college graduate with a limited credit history. Applying for a travel rewards card might be challenging. However, an FD-backed card with a credit limit of ₹50,000 secured by a ₹1 lakh FD could allow you to:
- Build your credit score by making timely payments.
- Earn rewards points on your everyday purchases.
- Still benefit from the interest earned on your ₹1 lakh FD.
Conclusion:
FD-backed credit cards are a valuable tool for individuals who may not qualify for traditional cards. They offer an opportunity to build credit responsibly while enjoying many of the benefits associated with traditional credit cards. If you’ve faced rejection, consider exploring the power of an FD-backed card to unlock the world of credit opportunities.
