Credit Card backed by Fixed Deposit, good idea?

G

Gaurish

ex-Mod
I was thinking of getting a credit card secured by FD. Mainly it would be for online transactions.

Asked about it today at my bank(SBI). manager said, I have to get a FD of 15k or above. Credit limit would be 85% of the FD amount. application fees is rs500 & annual fee is payable rs500 every year. I am okay with one time fees but annual fees is a bummer.

I was wondering if any of the members here use a "secured" credit card. What is your experience like? And getting Credit Card backed by Fixed Deposit, good idea?
 
As long as you are not using it for actual credit, just for transactions that you pay off as scheduled, it should be OK

If there is a fraud case though, it may be problematic

Try citibank or some other bank, you should be able to get a free basic credit card without too much hassle I think (probably disabling DND on your phone would do)
 
It is all a matter of discipline. As long as you know that you are spending for what you need and not what you want, you should be fine. If you are looking for a CC based on FD, opt for ICICI. They do not have any fees for their card
 
One downside that I can think of is that if there is a dispute over some transaction(s), the bank would directly take out money from the FD.
 
With ICICI Bank, do we get interest on FD? as SBI does give interest under normal interest rates.

mehrotra.akash said:
If there is a fraud case though, it may be problematic
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problematic in what sense? will the bank seize my deposit? or better question to ask would be:

Under what condition bank has a right to seize fixed deposit?
 
Gaurish said:
With ICICI Bank, do we get interest on FD? as SBI does give interest under normal interest rates.

Yup

problematic in what sense? will the bank seize my deposit? or better question to ask would be:

Under what condition bank has a right to seize fixed deposit?
Click to expand...

Bank can seize the deposit if you havent made the minimum payments on time. They can do this if you have a savings and credit card account in the same bank as well
 
I made the deposit with axis bank some months back for exactly the same puppose ....i was asking it to limit the CC amount to like 5K but the bank refused saying it will only give 85% and i dont want that much money in my CC account so backed off.....the deposit is just earning interest now lol .
 
sam000 said:
I made the deposit with axis bank some months back for exactly the same puppose ....i was asking it to limit the CC amount to like 5K but the bank refused saying it will only give 85% and i dont want that much money in my CC account so backed off.....the deposit is just earning interest now lol .
Click to expand...

A low credit card limit doesnt mean that you will not be allowed to spend more

Instead, if you spend more than the limit, you are charged (quite insane) fees
 
^^i think i didnt make things clear....made a FD for 25K and i asked the bank to limit the CC amount to 5K and they refused
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sam000 said:
^^i think i didnt make things clear....made a FD for 25K and i asked the bank to limit the CC amount to 5K and they refused
sad.gif
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Yeah, I got that

but the CC limit is not an actual limit.

I'm assuming you wanted to do that to prevent fraud, so that if the card gets stolen or something, the max loss is 5k. Is that right?
 
sam000 said:
Yeah exactly thats why i wanted to limit the card
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Click to expand...

Yeah, and it would not work because of the reason I described in post #8.

Basically, if your limit is Rs x , and you(or a thief) spends Rs y where y>x , you are charged a penalty on y-x

One would expect that the transaction would be declined, but I dont believe thats what happens
 
I am going for a similar CC from SBI itself. I remember the limit being 90% of the FD amount. I will be opening an account tomorrow for the same purpose.

Is ICICI better. My dad uses SBI card and he is himself in a bank and have suggested me not to go with ICICi becuase they are not understanding and charge insane amounts of charges if you make a mistake, which SBI doesn't.

For eg. last month we crossed the limit and the only charges the bank charged was Rs. 500 and we were given a window of a few days to deposit the over limit amount.

The only benefit of ICICi or HDFc for that matter is that you can get discounts at online shopping portals. since most of my shopping is going to be from abroad, i am going to stick with SBI.
 
mehrotra.akash said:
Yeah, and it would not work because of the reason I described in post #8.

Basically, if your limit is Rs x , and you(or a thief) spends Rs y where y>x , you are charged a penalty on y-x

One would expect that the transaction would be declined, but I dont believe thats what happens
Click to expand...

That sucks then is there any other way one can limit the damage from a lost credit/debit card ? i once lost the same banks debit card somewhere and fortunately got alerted in time and managed to block it .....dont want to go through the same thing all over again....from then on i only carry debit cards that have very less amount in it
tongu23e.gif
 
There is this savings bank account with Indian bank if you opt for that particular savings account they give you free cc its called "power" something i dont remember now exactly .
 
I'm having this CC linked FD from icici. there is no annual fees and yeah the interest on FD gets credited to my SB a/c. the conditions state that incase of default on payment of CC amount (dunno how much time is given), the bank will recover that amount from the fixed deposit.

just using it for some online transactions which is inevitable like steam, EA store, ebay.com(paypal) etc. but I mostly use the netbanking facility wherever it's available like ebay.in

_
 
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