ICICI Bank, SBI Cards and Axis Bank offer such products AS the credit card is already backed by a security, interest levied on such cards is almost half

HAS a bank rejected your credit card application because of a low credit score?
Or, have you avoided taking a credit card due to high interest rates? Now, you can try out security-backed credit cards or a credit card issued against fixed deposits (FDs).
Options: Credit card companies such as ICICI Bank, SBI Cards and Axis Bank offer these products to its customers.

This scheme was rolled out to bring down high delinquency (non-performing loans) rates. It is a win win situation for both banks as well as the customers.

While banks can ensure low default rates due to collateral of FDs, customers who were not eligible before for a credit card, can now get one.

Credit card holders will not be allowed to break the FD as long as they hold the credit card. In case of a default, the bank will forfeit the FD and recover its dues.

It is a good option because customers can earn interest on deposits and also have a credit card. As the credit card is already backed by security, interest levied on such cards is almost half. SBI Cards is joint venture between State Bank of India (SBI) and GE Capital.

Matter of interest: Annual interest on security-backed credit card is around 18 per cent, while on standard credit cards, it is 42 per cent. Credit cards companies give 40-50 days of free credit to customers.

However, if the customer doesn't pay after that, it starts levying high interest and penalties.

You can also improve your credit rating with these cards. Banks, while issuing security-backed credit cards, do not worry about poor credit score of an applicant. Before issuing any loan or a credit card, banks contact credit rating agencies, such as the Credit Information Bureau of India (Cibil). If an applicant has a low score, his application is rejected. Companies like Cibil keep track of a borrower's credit history and repayment behaviour. This score gives an indication of the creditworthiness of an individual.

Experts say that if you have good score, you can get a better bargain from your bank while applying for a loan. Credit card companies also have different interest slabs for different customers based on their credit history.