Credit card on FD: A financial lesson for your college-aged child

Anyone who owns a credit card would be familiar with the credit card approval process. For the uninitiated, you must have a respectable credit score and a proof of income to be eligible for a credit card. These are two simple criteria, that most college-goers cannot fulfil. A credit card on FD (fixed deposit) can be a great option for them.

A credit card on FD is a unique solution that empowers people without a CIBIl score or credit history to own credit cards.  Let’s understand FD-backed credit cards in detail.

What is an FD-backed credit card?
 

I don’t meet the credit card eligibility criteria, should I even apply for a credit card?

This is a common question among people who remain outside the scope of the credit card industry. Enter FD-backed credit cards. It is a credit card that is secured by an FD. The FD remains as collateral with the issuing bank, covering the risk of non-payment of outstanding credit card dues. For them, the FD acts as a guarantee against the credit limit offered. For customers, it provides the certainty that their FD-backed credit card application will be approved.

To sum up the benefits of a credit card on FD –

• Credit building -

A credit card on FD is issued even to people with low credit scores or no credit history at all. The customer can use their FD credit card as a tool to build their credit score. 

• No income criteria –

As the credit card is secured by a fixed deposit, the issuing bank does not insist on a minimum income criterion while approving an application for the FD credit card.

• Parallel income –

Credit cards come with reward points, cashback and other complimentary benefits. However, having a secured credit card means that you also have an active FD investment that continues to earn interest.

• Credit limit –

In a credit card on FD your credit limit is within your control. The credit limit offered is usually a percentage of the FD amount. So, if you want a higher credit limit, you can get it by making an FD of a higher value.

• Easy to apply –

In an FD-backed credit card, the issuing bank does not need to verify the customer’s income. So it’s processed much faster once you have opened the FD account.

• Minimal documentation –

The easy application process is also reflected in the minimal documentation. Basic KYC details and FD account information are sufficient to successfully apply for a credit card on FD.

The FIRST EA₹N Credit Card: a cashback credit card on FD
 

If you want to enjoy the above-mentioned benefits of an FD-backed credit card and earn cashback on your spends, you should choose the FIRST EA₹N Credit Card.

The FIRST EA₹N Credit Card by Metra Trust is a UPI-enabled virtual secured credit card that caters to everyone, regardless of their credit history. Here’s a look at some of the benefits of the FIRST EA₹N Credit Card –

• Low investment –

The FIRST EA₹N Credit Card can be obtained with an FD amount as low as ₹10,000.

• Welcome and renewal benefit –

The FIRST EA₹N Credit Card offers 100% cashback of up to ₹200 on the first four transactions (up to ₹50 on each transaction) made within 15 days via the Metra Trust mobile banking app. The same benefit is available on each annual renewal.

• Benefits on spends –

Being UPI-enabled it offers a 1% cashback on UPI spends made through the Metra Trust Mobile App and 0.5% on other spends.

• Complimentary benefits –

With the FIRST EA₹N Credit Card, you get complimentary roadside assistance of ₹1399, lost card liability cover of ₹25,000 and personal accident cover of ₹2 lakhs.

• Movie discounts: Get 25% off up to ₹100 on movie tickets booked on Paytm

The best part about owning a FIRST EA₹N Credit Card is that you get the regular credit card benefits even if you don’t meet the regular credit card eligibility parameters.

Why gift a FIRST EA₹N Credit Card to your child?
 

There may be people in your family who do not meet the eligibility criteria of a standard credit card, even if you meet them yourself. A homemaker, student or senior citizen may find a secured credit card, like the FIRST EA₹N Credit Card, helpful in meeting their expenses without hesitation.

With a regular credit card, kids may go on a spending spree and max out their card. Virtual credit cards, backed by FDs, allow you to control your child's credit limit and offer greater security against theft and loss.

For instance, let’s say your college-going son requires ₹40,000 every month for transportation, tuition and books, as well as the usual mobile recharge and Spotify subscription, as well as the usual burgers and pizzas. By creating a ₹50,000 FD in his name and getting a FIRST EA₹N Credit Card against it will ensure that his monthly expenses do not exceed the ₹50,000 limit.

The key to financial wisdom
 

Armed with a credit card on FD, your child can learn more about finances. You can do your bit to nudge your child in the right direction initially as they begin to use their UPI-enabled FIRST EA₹N Credit Card. 

• Explain to them what happens when you use a credit card - that it accumulates into a statement, which must be paid before a certain date, which, if not paid, can lead to interest costs and penalties.
• Explain to them how FDs compound in value and help them earn on their investment.
• Advise them on how to get maximum benefits from their credit card.
• Tell them that they must keep their expenses within the credit limit. This will help them develop financial prudency.
• Explain to them how controlled use of credit cards and timely repayment of the dues will improve their credit score, along with the importance of credit score in their financial future

Securing financial wisdom and spending power
 

A credit card on FD empowers every person to enjoy the benefits of a credit card. A student can get a credit card secured by FD, which can serve as an early lesson in financial planning and help them become financially responsible in life.

Normally, a college-going child would not have the chance to own a credit card. But with the FIRST EA₹N Credit Card, they can experience this virtual credit card with UPI compatibility. They can scan and swipe their way to becoming a financially responsible adult. If you are planning to apply for a credit card on FD for your child, explore the FIRST EA₹N Credit Card today.