Why taking loan against FDs is a better option than high-cost credit cards

Take this loan as an overdraft facility and pay interest only on the amount utilized

• While personal loans and credit cards are the most commonly used facilities when people need money at short notice, they carry a high cost
• One option is to take a loan against security, such as fixed deposits (FDs)
• The interest rate on these loans is typically 1-2.5 percentage points higher than the FD rate
• A loan against FD is also available as an overdraft facility—up to 85-95 per cent of FD value
• The interest on the overdraft facility is only charged on the amount withdrawn, and not on the entire overdraft limit