A fixed deposit is one of the most preferred modes of investment in India, and an FD that also provides you with a credit card, i.e. a credit card against an FD, is a win-win situation for risk-averse investors/customers and for those who wish to build/improve their credit score.

What is a Credit Card against an FD?

A credit card against a fixed deposit or FD is a secured credit card. Having a fixed deposit account is a prerequisite for getting a credit card against an FD. Many banks like SBI, SBM Bank (India), etc. offer this feature with their FDs.

The prime feature of this credit card is that the linked FD is lien-marked, i.e. acts as collateral. The credit limit is generally 80%-90% of the FD amount. It should be noted that the lien-marked FD keeps earning interest.

In case the cardholder misses the payment of the monthly credit bill, the bank can redeem the linked FD to recover the outstanding amount. Fees and charges on a credit card against an FD are usually lower than those on an unsecured card, and these cards are easily approved.

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Best FD-Backed Credit Cards in India

Here are some FD-backed credit cards mentioned in the source:

| Bank | Credit Card | Minimum FD | Key Features | | ----- | ----- | ----- | ----- | | SBM Bank | Step UP Credit Card | ₹2,000 | Up to 90% credit limit, nil annual fee, rewards, up to 50-day interest-free period | | SBI | SBI Unnati Credit Card | ₹25,000 | Rewards, fuel surcharge waiver, milestone cashback and brand offers | | ICICI Bank | ICICI Instant Platinum Credit Card | ₹50,000 | No joining/annual fee, movie and dining offers, reward redemption | | Kotak Mahindra Bank | Kotak 811 DreamDifferent Credit Card | ₹5,000–₹5,555 | Up to 90% credit limit, fuel surcharge waiver, reward benefits | | IDFC FIRST Bank | IDFC FIRST WOW! Credit Card | ₹10,000 | Credit limit linked to FD, FD interest, dining offers, insurance and fuel benefits |

1. SBM Bank Step UP Credit Card

Minimum FD: ₹2,000

Key Features:

• Credit limit of up to 90% of the FD amount
• Nil annual fee
• Nil joining fee for FDs above ₹5,000
• FD interest rate as specified by the issuer
• 1 reward point per ₹100 spent
• Helps build or improve credit history
• No savings account required
• Up to 50 days of interest-free credit period

2. SBI Unnati Credit Card

Minimum FD: ₹25,000

Key Features:

• No annual fee for the first four years
• 1 reward point per ₹100 spent
• Fuel surcharge waiver subject to applicable conditions
• Cashback on eligible milestone spending
• Offers from brands such as Amazon, Zomato, Ajio and MakeMyTrip

3. ICICI Instant Platinum Credit Card

Minimum FD: ₹50,000

Key Features:

• No joining or annual fees
• BookMyShow offers
• Dining offers
• Reward points redeemable across multiple categories

4. Kotak 811 DreamDifferent Credit Card

Minimum FD: ₹5,000 for non-811 customers and ₹5,555 for 811 savings account customers.

Key Features:

• Nil annual fee
• Credit limit of up to 90% of the FD amount
• Cash withdrawal facility subject to applicable limits
• Fuel surcharge waiver
• Welcome reward points
• Milestone benefits

5. IDFC FIRST WOW! Credit Card

Minimum FD: ₹10,000

Key Features:

• Credit limit of up to 100% of the FD amount
• Cash withdrawal facility subject to applicable limits
• FD interest as specified by the issuer
• Dining discounts
• Personal accident cover
• Fuel surcharge waiver
• Welcome cashback on eligible EMI transactions
• Roadside assistance benefits

Also Read: How to Get a Credit Card Against FD

How to Apply for an FD-Backed Credit Card Online

If you want to apply for a credit card online, the process generally involves these steps:

1. Choose an FD-backed credit card that matches your requirements.
2. Check the minimum FD amount and eligibility criteria.
3. Open or select an eligible fixed deposit.
4. Complete the online credit card application.
5. Submit the required KYC documents.
6. Wait for the issuer to verify your application.
7. Once approved, receive your physical or instant online credit card/virtual card where offered.

Some issuers may provide faster processing for eligible customers, but approval timelines vary.

Are FD-Backed Cards the Same as Instant Approval Credit Cards?

An FD-backed card may offer a relatively straightforward approval process because the FD provides security to the issuer. However, instant approval credit cards are not necessarily the same as FD-backed cards.

“Instant approval” generally refers to the speed of the application or decision process, while an FD-backed credit card refers to the card being secured against a fixed deposit.

Therefore, don't assume that every FD-backed card will be approved instantly. Check the issuer's current processing and eligibility requirements before applying.

Who Can Apply for a Credit Card Against an FD?

Eligibility varies between banks and cards. Generally, an FD-backed credit card is available to individual resident customers who meet the issuer's requirements.

The source specifies that the following may not be eligible for this facility:

• Minors
• Foreign nationals
• Third parties
• Partnership firms
• Trusts
• Societies
• Tax-saving FD holders
• NRI fixed deposit holders

A credit card may also not be issued against an FD that has already been marked as a lien, such as an FD used as security for a loan or overdraft.

Always check the eligibility criteria of the specific card before applying.

Who Should Consider an FD-Backed Credit Card?

An FD-backed credit card can be worth considering if you:

• Are unable to qualify for a regular credit card
• Have limited or no credit history
• Have a low or poor credit score
• Don't have conventional income proof
• Have an irregular source of income
• Are a freelancer or homemaker
• Have a relatively low income

For someone new to credit, an FD-backed card can also provide an opportunity to start building a credit history through responsible repayment.

Benefits of a Credit Card Against an FD

1. No or Limited Income Proof

Some FD-backed cards may have simpler income requirements because the fixed deposit acts as security.

2. Helps Build Credit History

Responsible use of an FD-backed credit card, including paying your bills on time, can help establish a positive credit history.

3. Credit Limit Linked to Your FD

The credit limit is generally linked to the amount kept in the fixed deposit. Depending on the card, banks may offer a percentage of the FD amount as the credit limit.

4. Continues to Earn Interest

Your fixed deposit continues to earn interest according to the applicable FD terms while it is being used as security for the credit card.

5. Easier Application Process

Many secured cards offer a digital application process, making it possible to apply for a credit card online without extensive paperwork.

6. Potentially Faster Approval

Since the card is backed by an FD, the approval process can be simpler for eligible applicants. However, approval is still subject to the issuer's criteria.

How Does an FD-Backed Credit Card Work?

The process is relatively straightforward:

Step 1: Open an FD
Book a fixed deposit with the bank for the required amount.

Step 2: Apply for the Card
Submit an application for the FD-backed credit card online or through the bank.

Step 3: FD Is Marked as Security
The bank places a lien on the FD as security for the credit card.

Step 4: Receive Your Credit Limit
The card issuer assigns a credit limit based on its policy and the FD amount.

Step 5: Use the Card and Repay on Time
Use the card for eligible purchases and pay your bills on time to maintain a healthy credit profile.

Key Features of Credit Cards Against Fixed Deposits

While features vary across issuers, FD-backed cards may offer:

1. Low Minimum FD Requirement

Some cards have relatively low minimum FD requirements, making them accessible to first-time credit users.

2. Credit Limit Based on FD

Banks typically offer a percentage of the FD amount as the credit limit. The exact percentage varies by card.

3. Minimal Documentation

Since the FD acts as security, some cards may have simpler documentation requirements.

4. Interest-Free Credit Period

Eligible purchases may come with an interest-free period, subject to the card's terms and full payment of the bill by the due date.

5.Rewards and Cashback

Depending on the card, users may earn reward points, cashback, discounts or other benefits.

6.Interest on Your FD

You continue to earn the applicable interest on the fixed deposit while it remains active.

FD-Backed Credit Card vs Regular Credit Card

| Feature | FD-Backed Credit Card | Regular Credit Card | | ----- | ----- | ----- | | Security | Backed by an FD | Generally unsecured | | Income proof | May be simpler | Often required | | Credit history | May be suitable for limited history | Usually considered | | Credit limit | Linked to FD amount | Based on issuer's assessment | | FD required | Yes | No | | Credit building | Yes, with responsible use | Yes, with responsible use |

Conclusion

An FD backed credit card can be a useful starting point if you're new to credit, have limited credit history or don't meet the requirements for some regular cards. Since the fixed deposit acts as security, these cards may offer a more accessible route to obtaining credit.

If you're searching for good credit cards, don't focus only on rewards or instant approval. Compare the FD requirement, credit limit, fees, interest-free period and other benefits before applying.

You can also explore options that offer a credit card online, virtual card functionality or faster processing if convenience is your priority. Most importantly, use the card responsibly and pay your bills on time to build a stronger credit profile over time.

FAQs

1. Can I Apply for an FD-Backed Credit Card Online?

Yes. Many banks allow eligible customers to apply for an FD-backed credit card online. The process generally involves booking an eligible FD, completing the application and submitting the required KYC details.

2. Will I Get 100% of My FD as the Credit Limit?

Not necessarily. The credit limit depends on the issuer and card. Some banks may offer around 80%–90% of the FD amount, while certain cards may offer a higher percentage. Check the specific card's terms.

3. Can an FD-Backed Credit Card Help Build My Credit Score?

Yes. Like other credit cards, responsible use of an FD-backed card and timely repayment can help establish a positive credit history.

4. Can I Withdraw Cash Using an FD-Backed Credit Card?

Some cards may offer cash withdrawal facilities, but the applicable limit, fees and interest can vary. Check your card's terms before making a cash withdrawal.

5. Do I Continue to Earn Interest on the FD?

Generally, the FD continues to earn interest according to its applicable terms while it is held as security for the credit card.