India reported addition of 10.3 million cards in circulation between May 2018 and 2019, as per data published by the Reserve Bank of India. This can be attributed to the widespread advantages of such cards, such as enhanced purchasing power, higher savings through reward points, as well as a rise in the CIBIL score.

Individuals availing credit cards to primarily increase credit scores can do so by availing a secured card against fixed deposits. This technique of increasing the CIBIL score is particularly beneficial for individuals having no borrowing history, or a below-par CIBIL score.

Nevertheless, the following pointers should be kept in mind before you apply for a credit card against fixed deposits –

• Make sure you repay the entire bill before the due date

Timely repayment of bills establishes cardholders as credible borrowers to financial institutions. This increases the CIBIL score automatically, thereby increasing their chances of availing high-value loans at attractive interest rates in the future.

• Check credit utilisation ratio to know monthly transaction limit

Most financial institutions recommend cardholders to maintain a credit utilisation of 60% of the total sanctioned credit limit, to ensure timely repayment of bills without extensive financial burden. Individuals sticking to such limits increase their overall creditworthiness, and hence, enjoy a higher CIBIL score.

• Keep track of all associated charges

Several credit card charges such as monthly interest rates, annual percentage rate, joining and membership fees, processing and annual maintenance charges should be looked into before availing a credit card. Also, timely repayment of the same should be made to ensure no subsequent dues. For example, the Bajaj Finserv RBL Bank SuperCard levies 2.5% processing charges on certain transactions such as ATM cash withdrawal.