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Many banks have offerred me life time free credit cards because of my good credit score. However, there are some banks which did not offer any life time free credit card. However they offer credit cards against fixed deposit. That is, we need to open a fixed deposit with them and some percentage of fixed deposit amount is offered as credit limit for the life time free credit card. I was guessing if this a good idea to obtain life time free credit card if those banks are not offerring one. Is there anything bad to obtain card in this way, say any bad effect on credit score etc.

PS1: Dont worry about my spendings habbit. They are unaltered despite of large number of credit cards I hold. I keep so many cards only to ensure I wont have to search someone with the card when there is some offer on the item I "need" to purchase. Also I hold only life time credit cards to even avoid annual fees.

PS2: Recently, I was also thinking to open FD to keep my liquid money. I used to park it in short term debt funds earlier. But since couple of years, debt funds category seems to have become more risky. So I was thinking if its finally to time to turn to FD for min-risk return, despite of low returns. So while searching I came to know about this category of cards first time and started feeling its best idea to have both some returns on idle money plus life time credit card.

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    In the US, banks make money on no-fee credit cards via a) interest if you don't pay your balance in full and b) interchange fees paid by merchants when you swipe the card.
    – ceejayoz
    Mar 25 '21 at 20:59
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ASSUMPTION - When you say "life time free credit card" I am assuming you mean they are giving you a credit card that has no interest? Or that has no annual fee? It would be helpful for you to clarify that for the readers in order to receive meaningful feedback.

If the offer of the card is similar to what other banks are willing to give you, the question is which offer is best. So, if the bank is willing to pay you interest on the fixed deposit AND give you the card, that is absolutely a better deal than simply being given the card by itself.

Now, that being said, if the bank DOES give you interest on the deposit, is the rate better than (or at least competitive with) what you would get for depositing or investing your money elsewhere?

If you can make better interest by investing or depositing your money in something else and still get an interest-free card for life from one or more banks then this would be your better choice. It all comes down to what you get for your deposit other than an interest-free card that you can ALREADY get from other banks without having to make a deposit.

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  • I said in the main question: "I hold only life time credit cards to even avoid annual fees". So to reiterate: by life time free, I mean "no annual fee". Yes, bank does indeed give interest over fixed deposit like any other fixed deposit. It might be less by 1% than other bank deposits, but not significantly (like even 2-3%). The goal is also to obtain CC of some specific banks which do not offer life time free CCs in any other way (for example, some banks provide life time free CC employees of well known companies). So I might compare with CCs of such banks, but not others [continued..]
    – Rnj
    Mar 24 '21 at 15:45
  • [...continued] Actually, I stumbled upon deposit linked life time free CC of a bank whose life time free CC I was was trying to obtain for long, but it never offered one even I was employee of well known company. (Other banks offered me such life time free CC for the same reason.) So was guessing whether to go for it. I generalized the questions for all banks which provide such deposit linked life time free CCs...But honestly currently I am targeting to this particular bank as I have CCs of most other well know banks..
    – Rnj
    Mar 24 '21 at 15:50
  • You said "life time free credit card" in your post, with no explanation about what "free" was, so I was asking for clarification. Thank you for that. I realize you don't think 1% is significant, but that depends on how much the deposit is (think about 1% on $1,000 and 1% on 100,000). So, if all of these cards have an interest rate and no annual fee, and you don't think 1% is a significant difference then the only thing left to look at is the interest rate charged by each card, since you have nothing else left to compare.
    – RiverNet
    Mar 24 '21 at 15:51
  • Yess....its indeed true that 1% is still significant. But my focus of the question was more on something that I might not know, since I am quite new to the concept of CC against fixed deposit, like if they affect "credit score" etc. I just checked they offer CC against any existing deposit with bank. So there is no such thing as special type of deposits for CC with low interest rate.
    – Rnj
    Mar 24 '21 at 17:27
  • I can't speak to how credit works in India, so I don't know if they distinguish between types of credit accounts in that manner there.
    – RiverNet
    Mar 24 '21 at 17:50
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LIFETIME FREE means absolutely ZERO charges to be its annual maintenance fees, renewal fees, joining fees, or whatever, irrespective of whether the card is used during a calendar year or a threshold expenditure is incurred or not, applicable before the card expiry date.

Lifetime free credit card may mean any of the following:

  1. A card in which the joining fee is waived off along with the first-year annual fee without any conditions.

  2. However, from the 2nd year onwards, banks may either waive the annual charges forever OR it may set a minimum threshold spends of say Rs 100000 (One Lakh) per year in order to waive the annual fees.

My HDFC Regalia is a good example. Still, Keeping it as it is an LTF Card that doesn't mean I’ll stick to it for the rest of life? Ofcourse not. To get maximum benefit, I need to upgrade it sooner or later. Regalia is one of the best credit cards in India for the past couple of years. However, they’ve devalued the point value in recent times.

Not just that, every year new cards are introduced with better reward rates and benefits as banks compete with each other to get better market share. When it comes to credit cards, it’s all about getting maximum value out of them.

So “ lifetime free” concept may NOT be a standard feature implemented across the same category of credit cards.

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