HDFC Credit Cards Apply basis FD | HDFC Millennia Credit Card Apply basis Fixed Deposit

Summary

In this video, the speaker explains the concept of HDFC Bank's secured credit cards, which are linked to a Fixed Deposit (FD). These cards are ideal for individuals with low credit scores or insufficient income. The video covers different types of FD-backed credit cards, including basic, freedom, and business black cards, each with varying FD requirements. It also discusses the pros and cons of locking funds in an FD for a credit card, including limited liquidity and taxable interest. The speaker recommends choosing an unsecured credit card if eligible, but suggests an FD-based card as a last resort.

Takeaways

• 😀 A secured credit card is backed by a Fixed Deposit (FD) balance, meaning the credit limit is directly linked to the FD amount.
• 😀 In case of non-payment of credit card bills, the bank has the right to break the FD and recover the dues from it.
• 😀 Even if you have a low income or a poor credit score, you can still qualify for an HDFC credit card by opening an FD with a minimum amount of ₹35,000.
• 😀 For higher credit card limits or better card options, you need to open a higher FD, such as ₹5,00,000 or more for a Business Black credit card.
• 😀 The credit limit on an FD-backed credit card cannot exceed the FD amount. For example, if you have an FD of ₹1,00,000, your credit limit will not exceed that amount.
• 😀 The credit card remains active as long as the FD is maintained. If the FD is withdrawn or matures, the credit card will be deactivated.
• 😀 In case of breaking the FD or reducing the FD amount, the credit card limit will also decrease proportionally.
• 😀 You should only opt for an FD-backed credit card if other direct credit card options are unavailable, as it ties up your funds in an FD.
• 😀 One of the key considerations before opting for an FD-backed credit card is whether the interest earned from the FD is sufficient, as tax will be applicable on the interest.
• 😀 Generally, the FD-backed credit card option may not be ideal unless you absolutely need a credit card. It's important to evaluate other options for better returns or interest rates.

Q & A

What is an FD-backed credit card?

An FD-backed credit card is a type of secured credit card where the credit limit is directly linked to the amount deposited in a Fixed Deposit (FD) with the bank. If you default on payments, the bank can use the FD amount to recover the dues.

How is the credit limit determined for an FD-backed credit card?

The credit limit on an FD-backed credit card is directly proportional to the amount of the Fixed Deposit. For example, if you have an FD of ₹1 lakh, your credit limit cannot exceed ₹1 lakh.

Can you apply for an FD-backed credit card if you have a poor credit score?

Yes, you can. Since the card is secured by your FD, the bank doesn’t consider your credit score or income level for eligibility, making it an option for those with a poor credit history or low income.

What are the eligibility requirements for an FD-backed credit card?

To qualify for an FD-backed credit card, you need to open a Fixed Deposit with the bank. The amount can range from ₹1,50,000 to ₹5,00,000 for a standard card, and ₹5,00,000 or more for a business card.

What happens if you break or reduce your FD during the tenure of an FD-backed credit card?

If you break or reduce your FD, your credit limit will be reduced accordingly. The credit limit is always tied to the FD balance.

Is the interest earned on the FD taxable?

Yes, the interest earned on the FD is subject to tax. You should factor in the tax implications when considering whether the FD returns are sufficient.

What are the downsides of choosing an FD-backed credit card?

The main downside is that your FD is locked and unavailable for other uses during the tenure of the credit card. Additionally, the returns on the FD may not be as high as other investment options, and you might have limited flexibility with your money.

Can you get a higher credit limit with an FD-backed credit card than your FD amount?

No, the credit limit on an FD-backed credit card cannot exceed the amount of the FD. If your FD is ₹1 lakh, your credit limit will not go beyond ₹1 lakh.

Are there any other types of FD-backed credit cards besides the standard one?

Yes, there are different types of FD-backed credit cards, such as the Business Black Credit Card, which requires a larger FD (₹5,00,000 or more) and is designed for business users.

Should you opt for an FD-backed credit card or a regular credit card?

If you qualify for a regular credit card without needing to lock an FD, it is generally better to go for that option. An FD-backed credit card should be considered only if you absolutely need a card and have no other way to qualify.