October 14, 2025 · 9 mins read
Santosh Kumar
Going through the process of getting a credit card can be daunting, especially if you’re new to credit or your score isn’t exactly impressive. In these scenarios, a credit card secured by a Fixed Deposit (FD) is a safe and uncomplicated way to deal with the situation. A bank issues this type of card using your FD as collateral, making it quicker and simpler to obtain.
This allows you to enjoy all the benefits of a regular credit card, including shopping, making online payments, and earning reward points, while your FD continues to earn interest. FD cards work wonders as a great early risk-free opportunity for novices or for those who wish to have positive credit restoration.
A credit card against a Fixed Deposit (FD) is a secured credit card that banks extend on your FD as collateral. It's for people who either have a poor credit score or no credit score at all and may not be eligible for a normal, unsecured credit card.
Different from the standard cards that rely mostly on income proof and credit history, this one is backed by your deposit. Since the bank already holds your FD as security, the risk is way less, making approval quick and easy.
Generally, the credit limit ranges from 75% to 90% of your FD amount. It actually depends on the bank’s policy. You also continue to earn regular interest on your fixed deposit, so your savings keep growing even when you are using the credit card.
Getting a credit card backed by a fixed deposit is simple and hassle-free. As your FD is used as collateral, banks are not very keen on your credit score or income documentation. This solution really comes in handy for students, homemakers, or anyone looking to build a credit profile for the first time. It’s an easy way to get started with little to no barriers and complexities.
Using an FD credit card sensibly is one of the best ways to build or rebuild your credit score. With each on-time payment reported to such credit bureaus as CIBIL and Experian, you are continually enhancing your credit profile. With time, this consistent payment history can help you qualify for regular, unsecured credit cards or even loans at better and lower interest rates than usual.
The approval rate for these cards will be almost 100% since the bank has your FD as collateral. Even individuals with low credit scores or unstable income can easily qualify. The system of this service also reduces your and the bank's risk of a non-payment situation. Even if payments are not made, the bank can still reclaim its dues from the deposit, which ensures both parties' tranquillity.
One of the best benefits of FD-backed credit cards is that your fixed deposit continues to earn normal interest, even though you use it as collateral. This means you enjoy two benefits simultaneously: your savings grow, and you gain access to a functional credit line.
Also Read: Is a credit card against FD good for credit score?
FD-backed cards work exactly like regular credit cards. You can use them for purchases online and offline, pay bills, or even make travel arrangements. A lot of banks provide rewards programs, and some may include cashback or discounts through their affiliates. That way, you can experience the same Convenient benefits and privileges of having a regular credit card.
Your credit limit depends on your FD amount, which is usually 75% to 90% of the deposit. For instance, if your FD amount is ₹1,00,000, then your credit limit may be around ₹80,000. This flexible design allows you to choose how much you'd like to deposit and prevents you from overspending, which helps you develop healthy financial behaviour.
If you use your FD credit card responsibly, then it can open doors to better financial products. Many banks review your payment history after 12 to 18 months and may offer to upgrade your secured credit card to a regular, unsecured one, which will give you freedom for expenses. Also, this helps you to build credibility and financial confidence over a period of time.
Also Read: Is a FD credit card good?
Credit cards supported by fixed deposits (FD) can be really helpful in challenging situations. They give you access to instant cash, without having to redeem your FD and pay a penalty. If you face an unexpected purchase or a medical emergency, your authorised credit limit acts as a cushion when you need it the most.
A credit card in support of an FD is a flexible option that is suitable for a wide range of users, especially those beginning their credit journey or looking to rebuild their score. Here's who can derive maximum benefits:
An FD-backed card is a good starting point for newbies. It teaches you the mechanics of credit, billing, and repayment without the risk of rejection because of no history.
Such persons with minimal or no credit history can utilise this card to create a good repayment history, which will gradually improve their score and financial credibility.
Also Read: What credit card has no annual fee for students?
Since proof of income is not needed, freelancers and entrepreneurs with sporadic incomes can qualify with ease using their FD as security.
With few income streams, homemakers and students can still enjoy credit safely, cover expenses, and begin the path towards independence.
If you've ever made an error on a loan or missed payments in the past, through this card system, you can rebuild your credibility, but regular on-time payments should be unavoidable.
If you prefer low-risk financial options, this card is perfect for you as it lets you enjoy credit benefits while keeping your deposit safe and earning interest.
Also Read: Which is the best student credit card available in India?
Fixed deposits have a lock-in period of one to five years. If you break the FD early, the card may be cancelled, and part of the interest will be surrendered.
Make your payments on time to establish a good credit rating. Delayed payments can damage your credit record, despite your FD serving as collateral.
Your credit limit is generally 75 to 90% of your FD value. For example, an FD of ₹1,00,000 provides you with approx. ₹80,000 as credit. Select a deposit size as per your spending power.
Just like standard credit cards, the FD-backed ones might come with joining or annual fees attached. It is highly recommended to compare different banks in order to get the best possible rewards, depending on the costs.
Also Read: What Does “Transaction Not Permitted” Mean on a Credit Card?
Irresponsible spending or late payments can lead to the bank recovering dues from your FD. Use it as a means to make your credit discipline better, not for excessive spending.
Every bank has different benefits and offers. Don't forget to check interest rates, cashback, and renewal terms first before giving your commitment.
To understand how the FD credit cards function, you can look into the following example. Suppose you open a fixed deposit of ₹1,00,000. The bank may issue a credit card with a limit of around ₹80,000, roughly 80% of your FD.
Our FD continues to accrue interest, perhaps 6% annually, while you use the card for daily payments such as online purchases, bills, gas, or vacations. Monthly, you get a statement reflecting your spending and payment date. Paying the balance in full (or the minimum) by the due date enhances a good credit history, building your credit score over time.
In case you submitted the payments late, the bank can draw the amount due from your FD, which will reduce the risk. This setup allows you to earn interest, use credit, and build financial credibility, all simultaneously.
A credit card over a Fixed Deposit is the perfect choice for anyone wanting to establish or restore their credit in a safe manner. It promises the same benefits as the traditional credit card, comfort, points, and adaptability, along with the added bonus of a secured fixed deposit that is still earning interest. With easy approval, minimal risk, and the potential to upgrade to an unsecured card over time, an FD-backed card helps you develop financial discipline and credibility.
Whether you’re a first-time user, a student, a homemaker, or someone recovering from past credit issues, this card provides a smart, low-risk way to step confidently into the world of credit.
A credit card delivered against FD means it is a secured credit card issued against your fixed-deposit account (FD). It is a great solution for customers who have no or low credit score.
The credit limit depends on the bank's policy; it usually ranges from 75% to 90% of your FD.
Yes. The fixed deposit will continue to earn interest earnings even though the amount will be held by the bank as collateral.
Anyone possessing an FD, mainly students, housewives, and part-time workers, or even those who just started using credit cards.
Yes, indeed. In their attempt to establish an impressive payment history and increase their credit score, borrowers will pay some of that extra money.
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