A Close Look at Credit Cards for Bad Credit Profiles
The
beauty of credit cards is the ability to purchase your favourite
stuff without requiring cash. Seeing this, banks keep launching a
diverse set of credit cards that have in them to meet the specific
needs of customers. However, one has to pass the approval test before
getting a card. Banks test the candidature based on the income,
expenses, the workplace or the business of an individual. The
approval is also dependent on the credit history that takes shape
based on how an individual has serviced the debt. And, if you have
handled the debt in not so desired way, chances of bad credit history
are all but obvious. And so, if you apply for a credit card with a
poor credit history, the lender may reject the application. But not
all is lost for you as there are ways by which credit cards for bad credit profiles can be given. Wanna know the same? Read the article
further.
Apply
for Credit Cards Against Fixed Deposit
Yes,
the doors would almost shut for any unsecured credit card offer.
However, the option of secured credit cards is always there to avail.
You can apply for a card keeping the fixed deposit as collateral.
Banks can easily approve these cards as they get the backing of a
fixed deposit. So, in case you default continuously, the lender
reserves all the rights to take over the deposit to recover the
pending dues.
What’s
the Credit Limit Going to be on FD-backed Credit Cards?
One
always keep an eye on the credit limit and rightly so as that defines
the extent up to which you can shop each month. Let’s be told that
secured credit cards come with a credit limit at around 80%-90% of
the fixed deposit value. So, if you open a fixed deposit worth
₹80,000,
the credit limit can be around ₹64,000-72,000.
Benefits
of FD-backed Credit Cards
Check
out the benefits of these cards below.
Credit
Score Can Go Up Quickly -
Secured credit cards have the potential to firm up your credit score
quickly than what remains the case otherwise. With the score going
up, chances of you improving the credit history become more. However,
it is needed you pay your dues on time.
Lower
Rate of Interest on Revolving Credit -
The revolving credit is a facility that banks offer to ease the
monthly repayment. So, if you can’t pay the dues in full, you can
pay the minimum due or more than that but below the total dues
courtesy revolving credit feature. Normally, the rate of interest on
unsecured credit cards remains 3%-4% on a monthly basis, which comes
down to around 2%-2.5% on secured cards.
Creates
a Source of Income Generation -
The fixed deposit would keep earning you over time. So, in a way, it
creates an additional source of income for you.
No
Need to Submit Separate Documents for Credit Cards -
There’s no need to submit separate documents for credit cards as
the lender would those while opening your fixed deposit account.
Further, if you open an FD account where you already have a savings
account, you don’t need to submit any documents with respect to the
former.
So,
don’t lose hope if you are struggling with a weak credit history as
secured credit cards are widely regarded as the best way to turn it
around. Keep maintaining the habit of paying the dues regularly and
get the score up with time.
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