Credit cards have become an integral part of our daily lives, providing us with convenience and financial flexibility. However, traditional credit cards often come with high interest rates and hidden fees that can add up over time. This is where credit cards against FD ICICI come in – a unique financial tool that allows you to make the most of your fixed deposits while enjoying the benefits of a credit card. In this article, we will delve into the details of credit cards against FD ICICI and how they can benefit you in achieving your financial goals.
What are Credit Cards Against FD ICICI?
Credit cards against FD ICICI are a type of secured credit card that is linked to your fixed deposit (FD) account with ICICI Bank. In simple terms, you use your FD as collateral to obtain a credit card. The credit limit of your card is typically set at a percentage of your FD amount, usually 80-85%. This means that if you have a FD worth Rs. 1 lakh, your credit card limit would be around Rs. 80,000 to Rs. 85,000.
How Do They Work?
The process of obtaining a credit card against FD ICICI is quite straightforward. All you need to do is open a fixed deposit account with ICICI Bank and apply for a credit card against it. Since your FD acts as collateral, there is no need for income proof or credit score check. Once your application is approved, you will receive your credit card, which can be used like any other credit card.
Benefits of Credit Cards Against FD ICICI
- No income proof or credit score required: As mentioned earlier, these credit cards do not require you to submit any income proof or undergo a credit check. This makes them an ideal option for individuals who do not have a stable income or have a low credit score.
- Lower interest rates: Since the FD acts as collateral, the risk for the bank is significantly reduced. As a result, these credit cards come with lower interest rates compared to traditional credit cards, which can go up to 40% per annum.
- Reward points and cashback offers: Credit cards against FD ICICI also offer various reward points and cashback offers on purchases made using the card. This allows you to save money while using your credit card for daily expenses.
- No annual fees: Most credit cards against FD ICICI do not charge an annual fee, making them a cost-effective option for individuals looking for a credit card.
- Build credit history: These credit cards are a great way to build or improve your credit history. By using your credit card responsibly and making timely payments, you can improve your credit score over time.
How to Use Credit Cards Against FD ICICI?
Using a credit card against FD ICICI is similar to using any other credit card. You can use it for online and offline purchases, bill payments, and cash withdrawals from ATMs. Here are some tips on how to make the most of your credit card.
Keep track of your credit limit
Since the credit limit for these cards is linked to your FD amount, it may change if you withdraw or deposit funds into your FD account. Make sure to keep track of your credit limit to avoid any declined transactions.
Pay on time
Timely payment is crucial when it comes to credit cards. Delayed payments can result in late fees and interest charges, which can add up over time. Set up automatic payments or mark your due dates on a calendar to avoid missing payments.
Monitor your spending
It can be tempting to use your credit card against FD ICICI for unnecessary purchases since you have a high credit limit. However, remember that you have to pay back the borrowed amount along with interest. Monitor your spending and use your credit card wisely.
Examples of How Credit Cards Against FD ICICI Can Be Beneficial
- Emergency expenses: Let’s say you have a medical emergency and need immediate funds. In such a situation, having a credit card against your FD can come in handy as it allows you to access cash quickly without breaking your FD.
- Improving credit score: If you have a low credit score, using a credit card against FD ICICI responsibly can help you improve it over time. By making timely payments and keeping your credit utilization ratio low, you can show lenders that you are a responsible borrower.
- Lower interest rates: Compared to traditional credit cards, credit cards against FD ICICI come with lower interest rates. If you have a large purchase coming up, using your credit card against FD can save you money on interest charges.
Comparisons Between Traditional Credit Cards and Credit Cards Against FD ICICI
| Traditional Credit Card | Credit Card Against FD ICICI |
|---|---|
| High interest rates | Lower interest rates |
| Credit score check required | No credit score check or income proof required |
| Credit limit based on credit history and income | Credit limit tied to FD account |
| Annual fees may apply | Most don’t charge an annual fee |
Tips and Advice for Using Credit Cards Against FD ICICI
- Pay on time: As mentioned earlier, timely payment is crucial when using any credit card. Make sure to pay off your outstanding balance in full each month to avoid interest charges.
- Keep your credit utilization ratio low: Your credit utilization ratio is the percentage of your credit limit that you use. It is recommended to keep it below 30% to maintain a good credit score.
- Avoid cash withdrawals: Cash withdrawals using your credit card can attract high-interest charges from day one. It is best to use your card for purchases or bill payments instead of withdrawing cash.
- Don’t miss payments: Missing a payment can not only lead to late fees and interest charges but also negatively impact your credit score. Make sure to pay at least the minimum amount due if you cannot pay the full balance.
- Monitor your FD account: Keep track of your FD account and make sure to maintain a sufficient balance to cover your credit limit.
FAQs About Credit Cards Against FD ICICI
1. How long does it take to get a credit card against FD ICICI?
Once you open a fixed deposit account with ICICI Bank, you can apply for a credit card against it online. It usually takes around 7-10 business days for your application to be processed and for you to receive your credit card.
2. Can I increase my credit limit on a credit card against FD ICICI?
Yes, you can request an increase in your credit limit by adding more funds to your FD account.
3. What happens if I default on my credit card payments?
Just like any other credit card, defaulting on your payments can result in late fees, interest charges, and a negative impact on your credit score. In extreme cases, the bank may liquidate your FD to recover the outstanding amount.
4. Is it possible to withdraw money from my FD account linked to my credit card?
No, you cannot withdraw funds from your FD account that is linked to your credit card. The FD acts as collateral and cannot be touched until you close your credit card account.
5. Can I still earn interest on my FD when using it as collateral for a credit card?
Yes, your fixed deposit will continue to earn interest as usual, even when used as collateral for a credit card.
Conclusion
Credit cards against FD ICICI offer a unique way to make the most of your fixed deposit while enjoying the convenience and benefits of a credit card. With lower interest rates, no income proof or credit score requirements, and the ability to build credit history, these cards can be a valuable financial tool for individuals looking to achieve their financial goals. However, it is essential to use them responsibly and make timely payments to reap the full benefits. We hope this article has provided you with valuable insights into credit cards against FD ICICI and how they can benefit you.
