Recently, we reviewed a Fixed Deposit backed credit card from ICICI Bank (ICICI Bank Instant Platinum First Credit Card). Such credit cards are useful for first-time borrowers who are struggling to get their first credit cards because of adverse or lack of credit history. You can use such cards to build or improve your credit history.
I found another FD-backed credit card from IDFC First Bank (IDFC First Wow! Credit Card), which seems more loaded compared to the ICICI Bank card. Let’s find out more about this card.
IDFC First Wow! Credit Card: Salient Features
- Secured by bank fixed deposit.
- Instant issuance.
- No credit history or income proof required. Hence, useful for students, home makers, or senior citizens.
- Lifetime free credit card. No joining or annual fee.
- There is minimum FD amount specified on the bank website.
- High Credit limit of at least 100% of the Fixed Deposit value. Not sure how this works. I assume this means the maximum credit limit can even be more than 100% of the FD value. However, I don’t think everyone will get such high limit. The bank may allow credit limit to exceed the FD value because of other comfort factors such as income proof or clean repayment record. Alternatively, the bank may be willing to increase the limit as the fixed deposit accumulates interest.
- Allows you to increase credit card limit instantly. You go to the site/app, create a new FD (by making a payment) and the limit goes up instantly.
- Interest-free credit period for cash withdrawals: You get an interest-free credit period of up to 45 days on all card purchases. That’s a common feature with credit cards. However, you get interest-free credit period of up to 45 days for even cash withdrawals at ATMs. I have never heard anything like this before. Why? Because the banks don’t make money when you make cash withdrawals at ATM. The banks make money when you swipe your credit card through the merchant discount rate (MDR). And it is this MDR that makes interest-free credit period possible. So, an interest-free credit period for cash withdrawals comes as a surprise. However, there is a cash advance charge of Rs 199 + GST. This charge can make up for the non-charging of interest if the cash withdrawal is not very big but won’t be sufficient for large withdrawals. Interestingly, the bank’s website indicates that it is possible to withdraw up to 100% of the Fixed Deposit value. It is possible that the bank has internal rules to limit the amount of cash withdrawals.
- There is no mention of any cap on the maximum credit limit.
IDFC First Wow! Credit Card: What Are the Card Benefits?
- 4 Reward points per Rs 150 spent.
- 1 Reward point = Re 0.25. Hence, this makes it Re. 1 per Rs 150 spent.
- No reward points on fuel, EMI, or cash transactions.
- No expiry date for reward points.
- You can redeem the reward points anytime while making the payment online. No restrictions on how you can utilize reward points.
- No forex conversion charge.
- 1% fuel surcharge waiver
- Discount on movie tickets booked through BookMyShow.
Compared to ICICI Bank Instant Platinum Credit card, this card has a simpler rewards structure. There is no restriction on how and where you can use the accumulated reward points. The conversion rate is also clearly specified (even though it can be changed anytime at bank’s discretion). With ICICI Bank Instant Platinum card, you could use reward points only for purchases on ICICI Bank Rewards portal. Hence, on this front, I find IDFC First card better than the ICICI Bank card.
Apart from that, I don’t see much difference. Personally, I do not see much merit in higher credit limit (as percentage of fixed deposit) and interest-free credit period for cash withdrawals. Of course, that does not mean you cannot find such features useful.
Such a card could be your first credit card. I do not imply you must own multiple credit cards. It could be your only credit card too. And there is one big benefit of FD-backed cards. It is difficult to get into serious debt issues with an FD-backed credit card. Yes, you could lose your entire fixed deposit to credit card dues, but that’s where the rut stops. With unsecured credit cards, while you are not forced to create a bank FD, your finances can get worse much more easily if you are irresponsible with card usage.
Disclosure: I do not own IDFC First Wow Credit card. I have relied on information available on bank website for this post.