A Credit Card against FD (Fixed Deposit), often a Secured Credit Card, is a type of credit card issued to individuals against the security of a fixed deposit account they hold with a bank or financial institution.
You should apply for a Credit Card against FD if you:
To get a credit card against FD, open a fixed deposit account with the bank. The amount you deposit serves as security. The bank may have a minimum deposit requirement.
You can use a credit card against FD just like any other regular credit card for making purchases, paying bills, and other transactions. The credit limit is your spending cap, and you must make monthly payments on the outstanding balance.
Interest rates on credit cards against FD are generally lower than those on unsecured credit cards because the fixed deposit acts as security. If you fail to make payments, the bank can use the FD to cover the outstanding dues.
These cards can benefit individuals with limited or no credit history, as they provide an opportunity to build a positive credit history by making timely payments.
Approval for a credit card against FD is typically easier to obtain than an unsecured credit card because the bank faces lower risk due to the collateral. It's a good option for those who may have been denied a regular credit card in the past.
These credit card is usually linked to the fixed deposit, so you cannot prematurely withdraw the FD until the credit card is closed or the bank releases the lien on the FD.
Credit cards against FDs generally have lower interest rates compared to traditional credit cards, making them a suitable option for borrowing money against your FD without the worry of high-interest rates.
Using a credit card against FD can help you improve your credit score, making it easier for you to secure future loans. Once your credit score increases, you can easily apply for traditional credit cards with higher credit limits and more rewards.
Fixed deposits are considered a safe investment choice in India, as they generate impressive returns while ensuring your money stays secure. Using an FD-backed credit card is a no-risk option.
With a credit card against FD, you don't need to submit any additional documentation because you already have an existing relationship with the bank.
The credit limit on your credit card is usually a percentage (often around 80-90%) of the amount you have deposited in the fixed deposit account. For example, if you have a fixed deposit of Rs. 50,000, your credit limit might be around Rs. 40,000 to Rs. 45,000.
Credit cards against FDs can be a great option for you if you may not be eligible for a traditional credit card due to low credit scores or lack of income proof. They offer several advantages, such as lower interest rates, the ability to earn interest on your fixed deposit while using it, and improving your credit score. Plus, they're backed by a safe investment choice, which makes them a no-risk option. And the best part is that you can use your fixed deposit for spending while it continues to earn interest!
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Several Indian banks offer credit cards based on fixed deposits, including Federal Bank (Fi Money’s banking partner).
The minimum fixed deposit amount for a credit card against FD varies from bank to bank.
Using a credit card against FD responsibly can improve your credit score despite the low credit limit.
You can increase your credit card limit by adding more money to your fixed deposit.
Credit limits on credit cards against FD are typically offered at around 80% of the amount deposited in the fixed deposit account by the bank.
In order to obtain a secured credit card, you are required to have a minimum deposit, which then becomes locked for the entire fixed deposit tenure. If payments are not made on time, your deposit may be negatively impacted along with your credit score.