It's a surprisingly difficult process to obtain your first credit card. Banks tend to favor applicants with a solid credit track record, but how does one get a credit track record if they can't access credit?

It's a typical problem for students, young professionals and people who have never taken a loan.

One option is an FD-backed credit card. It offers the security of a fixed deposit and the convenience of a credit card, so that eligible users can start to build a credit history with responsible repayment.

What is an FD Credit Card?

An FD credit card is a secured card that is given by the bank on the condition of a fixed deposit. As opposed to a conventional unsecured card that typically requires credit history and income, FD-backed cards are secured by your deposit.

If you open a fixed deposit of ₹20,000, for instance. Depending on the bank's policies, you might get a credit limit that corresponds to this amount. The deposit will continue to accumulate interest as per the terms and conditions and will be pledged as a security.

For those who have not established a credit history or have limited credit, this is a credit card to consider. But it depends on the issuer in terms of eligibility, the amount of the deposit, fees, and credit limits.

Why Are Fd-Backed Cards Helpful For Newbies?

The most difficult part of credit card use for beginners is comprehending the borrowing and repayment process. With an FD backed card, you can develop these habits using a credit facility backed by your deposit.

The credit card can be used for daily expenses like groceries or subscriptions and the remaining balance paid off prior to the payment date. As you make positive payments, they will be reported to credit bureaus and over time help build your credit profile.

However, don't forget that the fixed deposit doesn't cover your monthly expenses. You will still have to pay back the loan and failure to do so could result in losing your deposit.

Is It Possible For An FD Credit Card To Be A Credit Score Booster?

A credit score booster is a search that is conducted when individuals want to enhance their loan and credit card eligibility. An FD backed card can be used to build credit but it is not a quick fix.

There are a number of factors that affect credit scores such as repayment history, outstanding debt, credit utilisation and the age of credit accounts. Suppose two individuals are given the same credit limit. One pays the statement balance on time, and the other pays part of the amount and the remaining balance the following month.

They can have different credit profiles even if they use the same card type. The important factor isn't simply owning a credit card. It's your consistency in managing and maintaining it.

The following are some practical tips for all credit card beginners

If you are new to a credit card, use your card for things that you already spend money on in your monthly budget.

• Don't take out all of the cash in your credit card account at once.
• Make payment reminders, check monthly statements and try to pay the entire balance before the due date.
• You should also find out if your issuer sends repayment information to one of the credit bureaus.
• Do not make several card applications in a short span of time because it can impact your credit profile.
• Just be sure to check the annual fees, interest rates, and deposit withdrawal requirements before applying.

Make Small Steps And Develop Financial Confidence

The first credit card you get should be used for a purpose other than accumulating debt. An FD-backed card, if used wisely, can be a useful stepping stone to credit. By paying your bills on time, spending wisely and knowing what's on your credit report, you can take steps to improve your credit history. Explore trusted FD-backed credit card options and choose one that suits your financial needs, deposit capacity and long-term goals.