Post Office Credit Card Against FD

What is a Credit Card Against FD

A credit card against FD is a secured card in which your fixed deposit is used as security, and the credit limit is normally 75% to 90% of the FD amount. However, in case of Post Office, a credit card against an FD is not available. You may consider alternative options with other banks offering FD-secured credit cards. Approval is generally easy since the bank’s risk is low.

Popular Credit Card Against FD Options Available

The following are some of the most common FD-backed credit card offerings in India:

Features of a Credit Card Against an FD

A credit card against FD is an easy method of getting credit without compromising your savings. Key features include:

• Helps Build Credit Score: You can also enhance your credit profile by making on time payments and using the card responsibly.
• No Proof of Income is required: The FD in itself is security and therefore, the banks normally do not insist on receiving salary slips or other income proof.
• FD Continues to Earn Interest: Your deposit is still active and continues to earn interest even when the pledging is done.
• Credit Limit Linked to FD: This is usually between 75% and 90% of your FD value, which helps you keep your spending in check.

Should You Consider a Credit Card Against FD?

A credit card against FD enables you to keep earning the FD interest rate on the deposit. Below are the key advantages and disadvantages:

Pros

• High Approval Chances: It is easier to get an approval since the FD is a security.
• No Credit History Required: Appropriate for an investor with a low or no credit rating.
• Builds Credit Score: Regular payments are a benefit to building up your credit.
• Controlled Spending: The limit is linked with FD to reduce the risk of overspending.
• Earn FD Interest Rate: You continue to get interest on your deposit.

Cons

• Limited Credit Limit: Credit limit depends on your FD amount.
• FD Remains Locked: Unable to withdraw until the card is closed.
• Simple Rewards: Offers rewards points and is more beneficial compared to premium cards.
• Limited Liquidity: The full amount of FDs is not available. Only a certain amount can be taken as a credit limit.
• Not for High Credit Needs: Not appropriate when you require a high credit limit.

Things to Consider Before Applying for a Credit Card Against FD

A credit card on your Fixed Deposit is a smart way to establish credit and save your funds as well. The following are the key areas that you should consider before you apply:

• FD Lien and Liquidity: Your FD is linked as a lien on issuing the card. Until the dues are cleared or the card is closed, you cannot withdraw or close it.
• Credit Limit: Generally credit limit is set between 75% and 90% of your FD value. Deposit more to get a higher limit. Keep usage below 30% to maintain a healthy credit score.
• Fees and Charges: Check all the charges and fees, such as joining charges, yearly charges, late payment charges and card replacement fees, as minor fees can really accumulate over time.
• Grace Period: Most credit cards against FD support will have a grace period of 20-50 days. Make full payment due in this timeframe to avoid paying interest; even if you pay a part of the balance, interest will apply to the full balance due.
• Billing Cycle and Repayment: The billing cycle is usually 28 - 31 days. Track your due date and total amount due. Paying only the minimum avoids penalties, but interest will still apply to the remaining balance.

Eligibility or Documentation Requirements

The following table shows the minimum eligibility and documentation requirements for a credit card secured by an FD :

Key Takeaways

Credit cards against FD offer easy approval with minimal eligibility. The India Post does not provide a Post Office credit card against FD. Post Office specialises in services such as IPPB savings accounts and digital payments. If you want a credit card against FD you can explore other banks for a credit card against an FD. You can easily compare them based on fees, features, and your financial needs. The credit limit is usually 75% to 90% of the FD amount.