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Credit Card Against FD: Key Benefits and Best Picks for 2024
Whenever you face a financial pinch, your credit card can provide much-needed support. This may include cashless transactions, emergency funding, reward benefits, and the convenience of a ‘buy now and pay later’ feature. However, not everyone qualifies for credit cards, especially those with low credit scores or no credit history, as banks typically use to assess applicants' creditworthiness based on their credit history. This is where credit cards against fixed deposits come into play, serving as a lifesaver for those who fail to meet the criteria for traditional credit cards. Let’s scroll down to learn more about the fixed deposit credit cards. This all-in-one guide will explain what a credit card on FD is, its expected features, the application process, expert tips, and more.
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A credit card against FD is a type of secured credit card. Unlike regular unsecured credit cards, these cards require you to pledge a fixed deposit as collateral. The credit limit is typically a percentage of the FD amount, ensuring the bank is protected against default. It particularly benefits individuals with low or no credit scores, enabling them to build or improve their credit history. Moreover, this type of credit card offers all the convenience and benefits associated with a regular credit card. This ultimately makes FD-based credit cards an ideal option for many people who might otherwise struggle to obtain one due to their poor credit history.
How Secured Credit Cards Function?
Secured credit cards function similarly to regular credit cards but with a few key differences. When you apply for a fixed deposit credit card, the bank uses your fixed deposit as security. And if you fail to pay your credit card bill, the bank can recover the amount from your FD. This significantly reduces the bank’s risk, making it easier for individuals with low or no credit scores to obtain a credit card.
Key Features of Credit Cards Against Fixed Deposits
Have a close look at the applicable features of a credit card against FD:
- Secured Credit: These cards are secured against your fixed deposit, reducing the risk for the lender.
- Credit Limit: Typically, the credit limit is a percentage of the fixed deposit amount, often up to 85-90%.
- Easy Approval: Approval for these cards is easier, especially for those with poor or no credit history.
- Minimal Documentation: The application process requires minimal documentation since the fixed deposit serves as collateral.
- Interest Earnings: You continue to earn interest on your fixed deposit even while it is pledged to the credit card.
- Eligibility for All: These cards are accessible to students, homemakers, and those with low or no income.
Top Credit Cards Against Fixed Deposits in India for 2024
| Credit Card | Minimum FD | Key Features | Joining Fee | Joining Fee |
| IDFC FIRST Bank Wow Credit Card | ₹5,000 | 100% FD credit limit, 7.5% FD interest, split payments into instalments, attractive reward points. | Nil | Nil |
| ICICI Bank Coral Credit Card | ₹30,000 | 15% off dining at 2500+ restaurants, free airport lounge access, and Buy one get one free movie ticket. | ₹500 | ₹500 |
| SBI Unnati Credit Card | ₹25,000 | No annual fees for 4 years, 1 reward point per ₹100 spent, and a 1% fuel surcharge waiver. | Nil | ₹499 |
| Axis Bank Insta Easy Credit Card | ₹20,000 | 50-day interest-free credit, 85% FD credit limit, cashback offers, and reward points. | Nil | Nil |
| Bank of Baroda Prime Credit Card | ₹15,000 | 1% cashback on all transactions, 4 reward points or ₹1 redemption per ₹100 spent, and 1% fuel surcharge waiver. | Nil | Nil |
Is It Good to Have a Credit Card Against Fixed Deposits?
Having a credit card against an FD can be highly beneficial. It provides credit access for those who might not qualify for a regular credit card. It further helps you build or improve your credit score, which can be advantageous for future financial needs. Moreover, the benefits and rewards associated with these cards are similar to those of unsecured credit cards. It is also essential to use the card responsibly to avoid high interest rates and potential penalties.
Eligibility Criteria for Credit Cards Against Fixed Deposits
You generally need to meet the following criteria to be eligible for a credit card against FD:
- Age Limit: You need to be at least 18 years old, while some banks may require a minimum age of 21.
- Fixed Deposit Account: You must have an existing FD account or be willing to open one with the issuing bank.
- Minimum FD Amount: The minimum deposit amount varies by bank, usually ranging from ₹10,000 to ₹30,000.
- FD Tenure: The fixed deposit should have a minimum tenure of 6 months.
- Residential Status: You must be an Indian resident, although some banks may accept NRIs with a valid Indian residential address.
Steps to Apply for Credit Cards Against Fixed Deposits
Below are the steps you must follow regarding an FD credit card application:
- Open a Fixed Deposit: Open a fixed deposit account with the bank from which you want to obtain the credit card.
- Check Eligibility: Ensure you meet the bank’s eligibility criteria for a secured credit card. This usually includes factors like age, minimum FD amount, and the tenure of the fixed deposit.
- Apply Online or Offline: Online applications are typically more convenient and faster, while offline applications may provide more personalised assistance.
- Submit Documents: Provide the necessary documents with your application. These may include identity proof, address proof, and details of your fixed deposit.
- Approval and Issuance: Once your application is reviewed and approved, the bank will issue the credit card.
Required Documents for Credit Cards Against Fixed Deposits
You typically need to submit the following documents to apply for a fixed-deposit credit card:
- Identity Proof: Aadhaar card, passport, voter ID, or driving license.
- Address Proof: Utility bills, passport, aadhaar card, or rental agreement.
- PAN Card: Your Permanent Account Number (PAN) card is usually required.
- Fixed Deposit Certificate: The certificate or receipt of your fixed deposit.
- Photographs: Recent passport-sized photographs.
Benefits of Credit Cards Against Fixed Deposits
Let’s examine the expected benefits of a credit card against FD:
- Rewards Programs: You can earn points, cash back, or miles on every purchase, unlike fixed deposits, which offer only fixed interest.
- Interest-Free Period: Enjoy up to 50 days of interest-free credit, allowing you to manage cash flow effectively.
- Buy Now, Pay Later: Make purchases now and pay for them later, offering greater financial flexibility.
- Emergency Fund Access: Provides access to emergency funds without breaking the fixed deposit, providing greater financial flexibility.
- Convenience: Easy to use for online and offline transactions, providing greater accessibility than fixed deposits.
- Building Credit History: Regular use and timely payments improve your credit score, unlike fixed deposits.
- Low Annual Fees: Many banks offer FD-based credit cards with low or no annual fees, making them a cost-effective option.
- Lower Interest Rates: Interest rates on these cards are usually lower compared to unsecured credit cards.
FAQs
Is having a credit card against my fixed deposit a good idea?
Yes, it’s beneficial for building a credit history and getting a card with lower interest rates. However, the credit limit is typically lower than unsecured cards.
Best banks offer credit cards against fixed deposits?
Top banks include SBI, ICICI, Axis Bank, HDFC Bank, Kotak Mahindra, and IDFC FIRST Bank.
Are foreigners eligible for credit cards against FD?
No, this facility is generally unavailable to foreign nationals, as it’s typically restricted to resident Indians.
Can I withdraw cash from ATMs using my credit card against a fixed deposit?
Yes, most banks allow ATM withdrawals up to 100% of your credit limit, but fees and interest may apply.
Is an interest-free period available for a credit card against a fixed deposit?
Yes, secured credit cards often offer an interest-free period, typically up to 50 days.
Does the credit limit on a fixed deposit-backed credit card increase over time?
Generally, the credit limit is tied to your FD amount and doesn’t increase over time, as it remains a certain percentage of the FD amount
Will my credit card limit be equal to 100% of my fixed deposit amount?
Most banks offer a credit limit of 75% to 85% of the fixed deposit amount, though only some may offer up to 100%.
What distinguishes a secured credit card from an unsecured credit card?
A secured credit card requires collateral (FD), has lower interest rates, and is easier to obtain. An unsecured card doesn’t need collateral but has stricter eligibility and higher interest rates.
