October 12, 2025 · 9 mins read
Santosh Kumar
Within the realm of personal finance, a credit card is more than just a piece of plastic you use to make payments—it is a mechanism that helps you manage cash flow, earn rewards, and establish your credit score. However, it is not always easy to get a conventional unsecured credit card. Those with no credit history (like students and homemakers), as well as individuals with a low CIBIL score and other types of professionals, may find that they experience challenges in obtaining approvals. This is where the FD credit card, or secured credit card, comes into play. An FD Credit Card is secured by a fixed deposit (FD) you maintain with the bank and is one of the most straightforward, low-risk credit products in the Indian market. But is an FD credit card really a good product? Let's take a closer look.
An FD credit card is a type of secured credit card that is issued against the security of your fixed deposit. The bank puts a hold on your FD as collateral, so even if you do not make payments on your credit card dues, the bank is able to claim the outstanding dues from your deposit.
Your security deposit gives the bank the confidence to give you a credit card, even if you have a low (or sometimes no) credit score. Unlike traditional credit cards, which require you to show proof of income or a strong track record of repayment history, FD-based cards are issued against the value of your deposit.
Banks offer secured credit cards as a way to be more inclusive in lending. Unsecured credit cards are based on trust and creditworthiness, while secured cards allow banks to minimize any risk inherent in being credit providers. Secured cards exist primarily for the following categories of people:
1: People who are new to credit and have no CIBIL history
2: Students or young professionals without proof of income
3: Someone who has a poor or low credit score
4: Statistics show that senior citizens or homemakers may not have active income.
The fundamental operating aspect of an FD credit card is straightforward - the bank presents a credit card against your FD (fixed deposit) amount. Normally, the process goes like this:
1: First, you open a fixed deposit of some specified amount (let's say ₹10,000 and above).
2: The bank issues a credit card that is about 75-90% of that FD amount.
3: You use the credit card as you would a regular credit card for shopping, bill payments, online transactions, etc.
4: Each month, you get a bill that you need to pay before the due date.
5: If you miss making a payment or payments, the bank can recover the dues from your FD.
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An FD credit card is a great option, particularly for those new to credit or who are trying to rebuild their credibility.
Guaranteed approval - since it is secured by your own money, there is virtually no chance of rejection.
Credit building - every transaction and repayment is history that establishes you as a creditworthy individual.
Interest continues to accrue - while the FD is being used as security, it also still earns interest.
No income proof required - great for students, homemakers, and new professionals.
Can eventually upgrade - over time, usage of a secured credit card with good repayment history may qualify you for an unsecured credit card.
Also Read: When to Convert Credit Card Payments into EMI?
Simple Approval Procedure - FD credit cards are easy to get, as the bank's exposure is eliminated. Even those who have no evidence of income or a low credit score can qualify as long as they are willing to open a fixed deposit.
Aids in Constructing or Repairing Your Credit Score - For every instance of on-time repayment, credit agencies such as CIBIL and Experian receive notifications. After a few months of responsible use, you can construct or repair a good credit score with your usage activity.
Interest is Still Earned - Your fixed deposit continues to earn interest at whatever rate is still being received. Your money is still growing while you are using it as collateral.
Flexibility for Credit Limits - The credit limits for these cards are driven by your FD amount. If you increase your FD amount, the credit limits can be distributed proportionately.
Standard Credit Card Perks - All of the same general perks still apply – cashback, rewards points, discounts, bonus points – even complimentary lounge access in some cases.
Minimal Risk for Overspending - With your limits being driven by your FD value, there is a natural limit in which you cannot overspend recklessly unless you increase your FD value.
Also Read: Should You Use a Credit Card for High-Value Purchases?
Though FD credit cards provide a host of benefits, there are some drawbacks that you should be conscious of before proceeding with the application.
FD Lock-in - When your FD is lien-marked for the card, you cannot bail it out until the card has been closed. So, if you need access to those funds in an emergency, you are out of luck.
Loan Amount Restriction - Since your credit limit is tied to your FD, you generally end up with less credit than cards that are unsecured loans.
Default Penalties - If you do not make your payments, the bank can recover the amount due from your FD, which will reduce your savings and impact your credit score.
Fewer Perks than Premium Cards - Most secured cards are just basic entry-level cards, so the card reward structures or offers will not match up to premium and unsecured cards.
Also Read: Best Spending Categories to Earn Maximum Rewards
Though features may vary slightly from one bank to another, here are the common features:
1: Minimum FD amount: normally ₹10,000 to ₹25,000.
2: Credit limit: usually 75% to 90% of your FD amount.
3: FD to generate interest: the FD will continue to earn interest based on the regular bank rates.
4: Tenure is linked to your FD.
5: Rewards: cashback, fuel surcharge waivers, and reward points on spending.
6: Interest-free period: up to 45-55 days on regular purchasing in most cases.
1: Routine Use: Using your card for a small expense every month shows lenders that you are a good steward of credit.
2: Pay on Time: Paying your card balance in full and on time positively affects your credit report.
3: Credit Utilisation: A credit utilisation ratio of less than 30% demonstrates responsible credit usage.
4: Credit History: Even just under six months of disciplined usage can provide excellent leverage for loan or card applications in the future.
Also Read: Difference Between Annual Fee and Joining Fee
As more people know the importance of building their credit early, FD credit cards can serve as a safe way to begin doing so.
They are also popular with a majority of users who prefer to use a credit card without the risk or commitment, while still being rewarded for purchases. Overall, FD credit cards allow users access to a unique set of perks that a normal credit card would normally require a long and in-depth process surrounding eligibility, along with minimum income requirements.
An FD credit card is certainly one of the most prudent ways to gain access to credit without the fear of being denied or the risk of going into debt. It is targeted towards new users and individuals rebuilding their credit scores, because it marries the safety of a fixed deposit with the advantages of a credit card.
While an FD credit card may not come with the lavish benefits of a premium credit card, its ease of use, quick approval process, and credit-building factor make it an outstanding option. If used responsibly, it can be a stepping stone to your financial health, enabling you to move to unsecured credit cards and, in time, loans in the future.
Also Read: Foreign Transaction Fees on Indian Credit Cards
Typically, banks will issue a secured credit card with a fixed deposit ranging from ₹10,000 to ₹25,000 as the minimum deposit, but the precise amount will depend on bank policy.
Yes, although your FD is collateral for your credit card, it will continue to earn an interest.
You can, but your fixed deposit will likely incur early withdrawal penalties, and in all likelihood, your credit card will also be cancelled or automatically closed.
Yes, timely payments and responsible use will help improve your credit history.
Yes. Once you have a good payment history, banks will let you upgrade from an FD to a regular card.
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