Business Standard

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

This decade-old Sebi guideline is holding up much-awaited SBI Cards IPO
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One option is to take a loan against security, such as fixed deposits | Photo: Shutterstock

Sanjay Kumar Singh New Delhi
  • 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  • The interest on the overdraft facility is only charged on the amount withdrawn, and not on the entire overdraft limit

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First Published: Jun 21 2020 | 7:15 PM IST

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