A secured credit card often feels like the simplest way to step into the world of credit, especially if someone doesn’t have an established history or has faced rejections before. It gives the comfort of a deposit as collateral while also opening doors to digital transactions, rewards, and the chance to build a reliable score. But even with such benefits, applicants sometimes make avoidable errors that reduce the value of their decision. Recognising these mistakes early can save effort, money, and unnecessary setbacks.
Ignoring the Eligibility Conditions
One of the most common slip-ups happens when people assume that just having a deposit is enough. Banks often set specific rules about the minimum deposit amount, tenure, and account type. Some even require the fixed deposit to be linked to the same branch or account. Different banks will have different rules. For example, for the Kotak811 credit card against FD, you need a minimum FD of 10,000 for a tenure of 181 days. Overlooking these small details may lead to last-minute surprises during the application stage. Before applying, it’s better to review the conditions in detail and confirm whether your deposit qualifies.
Choosing a Deposit Tenure That Doesn’t Match Your Needs
A secured card remains active as long as the fixed deposit stays locked. If the deposit matures too early, the card will get cancelled or renewed based on fresh terms. Many applicants forget to align the deposit period with their expected use of the card. For example, if you’re looking for a card to help build a score over a couple of years, tying it to a one-year deposit might be a mismatch. Selecting a tenure that fits long-term goals ensures consistency and avoids disruptions.
Not Checking the Interest Rate Impact
Another overlooked detail is the interest earned on the fixed deposit. While the deposit itself continues to earn returns, certain banks may impose restrictions, penalties, or lower rates if the deposit is prematurely broken due to card-related issues. Applicants who ignore these conditions often find their expected earnings reduced. Always check whether the interest remains unaffected and what penalties apply if the card is closed before maturity.
Overestimating the Credit Limit
A secured credit card usually offers a limit that ranges between 75% and 90% of the deposit value. Some people assume they’ll get access to the entire amount as credit, only to be disappointed later. This overestimation could affect budgeting, especially if you planned on using the card for bigger purchases. Setting realistic expectations and confirming the limit upfront makes it easier to plan expenses.
Missing Out on Fee Details
Processing fees, annual charges, and late payment penalties are often hidden in the fine print. Applicants sometimes skip this part, thinking the deposit alone covers all risks. But charges can pile up quickly if you’re not careful. For someone starting out on credit, overlooking these costs may also defeat the purpose of building financial discipline. A good practice is to compare fees across banks and ensure the benefits outweigh the recurring charges.
Not Understanding the Link with Credit Score
The whole purpose of taking a secured card is often to build or repair credit. But this goal only works when repayments are on time and usage is kept within healthy limits. Spending the full limit every month or leaving dues unpaid will harm your score instead of helping it. Maintaining a low credit utilisation ratio and paying bills before the due date is the most effective way to get long-term benefits.
Overlooking Reward Programmes and Benefits
Many applicants fail to notice that secured cards also come with perks like cashback, reward points, or discounts. While these may not be as extensive as premium cards, they can still add value when used smartly. Ignoring these benefits means missing out on opportunities to save money. Checking the features in detail helps you make the most of everyday spending.
Not Planning for Renewal or Closure
When the fixed deposit matures, the linked card may automatically close unless the deposit is renewed. Applicants often forget about this timeline and face sudden cancellations, which can disrupt credit history. It’s wise to mark the maturity date, plan renewal, or upgrade to a regular unsecured card if you’ve built a strong score by then. This transition can ensure continuity and help you maintain momentum in your financial journey.
Using the Deposit for Emergency Needs
This is a practical mistake that many don’t think about at the start. Since the deposit is locked as security, you won’t be able to break it easily in case of emergencies. People who use their entire savings for the deposit often regret not leaving a cushion for unexpected expenses. It’s better to only pledge an amount you can comfortably set aside.
Conclusion
Applying for a credit card backed by a fixed deposit can be a smart choice when done carefully. It creates a bridge into the world of credit while keeping risk in check. But the real value lies in avoiding common pitfalls like ignoring eligibility, misjudging tenure, or skipping repayment discipline. By treating the card as a stepping stone rather than just a convenience, applicants can strengthen their financial base and move toward better options in the future. Making informed choices and steering clear of these mistakes ensures you don’t just get approved but also truly gain from the experience.
T&C Apply. Information present in the article is subject to change. The brand does not endorse any advise shared in the article. Features and benefits mentioned in the article are also subject to change. For latest updates regarding products, visit the Kotak811 website.
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