Credit Card Against FD: Features, How to Apply, Minimum Amount

A credit card is a highly preferred payment option because, along with more than 30 days of interest-free credit, it allows you to make cashless purchases online and offline. However, if your credit card application has been rejected previously, you still have a chance to get a credit card. Those who do not have a steady income or are new to credit can get access to a credit card against your FD account.

In this article, you’ll know what is credit card against fixed deposit (fd) is, its features, benefits, eligibility, how to apply for the fd card, the minimum amount required and more.

What is a Credit Card Against Fixed Deposit?

A credit card against FD is a secured credit card that banks offer against your fixed deposit account. Similar to FD loans, you can pledge your fixed deposit as collateral and obtain a credit card against FD. It means that if borrowers do not pay their credit card bills, banks have the right to recover the outstanding balance from their fixed deposit account.

One of the most significant advantages of a secured credit card is that it is available to most individuals regardless of their credit score, income, or occupation. However, eligibility criteria vary from bank to bank.

Generally, banks offer credit cards based on parameters such as the applicant’s credit score and gross income. These credit cards are also called unsecured credit cards since they are not backed by any collateral. FD credit cards are ideal for those with no credit history or low credit scores looking to improve their credit profile. 

Depending on the bank, you can avail of a credit card on a minimum fixed deposit of Rs. 10,000. Credit limits typically range from 75% to 85% of the FD value. Therefore, investing a higher amount in a fixed deposit will enable you to have a higher credit card limit. Almost all prominent banks in India offer credit cards against fixed deposits.

Also Read: Experience financial growth with unmatched Bajaj Finance FD Rates

Features of a Credit Card Against Fixed Deposit

Take a look at the key features of a credit card against FD:

• It requires minimal documentation; does not require income proof.
• Most banks offer 75% to 85% of the FD amount as a credit limit.
• It can help improve your credit score. With a healthy credit score, you can qualify for loans in future.
• Most credit cards offer rewards and cashback.
• You will continue earning interest on your fixed deposit.
• Depending on the bank, the minimum tenure for fixed deposits can be as low as six months.
• Banks usually offer an interest-free period of 48 to 55 days to pay the credit card bill.
• You may be able to apply for an FD credit card online with some banks.

Also Read: NPS Tax Benefits: Everything to Know

Best FD Based Credit Cards Offered by Top Banks in India

Eligibility to Apply for a Credit Card Against Fixed Deposit

The eligibility criteria may vary from bank to bank, however here are a few essential factors to consider:

• You must be an Indian resident and should be at least 18 years of age (for some banks minimum age required is 21)
• You should have an FD account with the bank
• FD tenure should be a minimum of 6 months
• Depending on the bank, you may need at least Rs 10,000 in your FD account to obtain a credit card against FD

Also Read: How to Improve Your Credit Score Immediately- 10 Smart Ways?

Who is a Credit Card Against Fixed Deposit Suitable For?

Credit Cards against Fixed Deposits cater to a diverse demographic, helping individuals navigate their financial journey effectively. Here’s a glance at who finds this option particularly advantageous:

1. Individuals with Low or No Credit History: Those who haven’t yet built a credit footprint or have a low credit score can opt for this card, as it doesn’t rely on credit history for approval.
2. New Income Earners: People who have recently stepped into the earning phase might not meet the traditional income criteria for standard credit cards. This card serves as an ideal entry point for them.
3. Residents of Blacklisted Areas: If you reside in an area flagged or blacklisted by lenders, acquiring a standard credit card might be challenging. A Credit Card against Fixed Deposit bypasses this hurdle, offering a reliable alternative.
4. Employees of Blacklisted or Ill-Reputed Organisations: Individuals working in organisations that are either blacklisted or don’t have a favourable reputation with lenders can still avail themselves of credit facilities through this option.
5. Students, Homemakers, and Freelancers: This card is a boon for those with unconventional employment, like students, homemakers, or freelance workers who may not have regular income proof, enabling them to build a credit history.
6. Seekers of Additional Credit Lines: Holding a secured credit card and maintaining good standing opens the doors to other credit avenues, facilitating access to varied loans like personal, home, or auto loans.

Documents Required for FD-Based Credit Card

Applying for a credit card against FD involves minimal documentation.

• If you already have an FD account with a bank, you don’t have to submit any other documents related to proof of identity or address
• If you don’t have an FD account, you will have to open one. While opening an FD account with a bank, you will have to submit documents such as your identity and address proof. Document requirements may vary from bank to bank
• If the bank allows, you can apply for a credit card against FD online through your bank’s net banking or mobile banking app. You may not need to submit any documents since you are an existing customer of the bank

How can you Apply for a Credit card Against an FD?

Whether you are a first-time FD account holder or already have an FD with the bank, applying for a Credit Card Against Fixed Deposit (FD) can be simple and uncomplicated. Here is a step-by-step manual to assist you in using the application:

For Non-FD Accountholders:

Visiting Your Bank: If you don’t already have one, this first step with Fixed Deposits should be to go to the bank’s nearest branch and open an FD account.|

Form Filling: To apply, complete the form. Once the FD account is open, you can fill out the credit card application available at the same bank.

Online Submission: Once your FD account is activated, many banks also provide the ease of applying for a credit card online.

For Existing FD Accountholders:

Apply Online: By going to the bank’s official website and finding the appropriate section, you can quickly apply for a secured credit card if you already have an FD account.

Following instructions: You will be guided by the website through the application procedure, making it a painless process.

Submission of Document:

Minimal Documentation: This card has the benefit of requiring little documentation. The proofs provided when opening an FD account are normally taken into account by the bank.

Validity Check: The bank may check the authenticity of the papers, particularly the current address, so make sure your paperwork is current.

Benefits of FD Credit Cards

Fixed Deposit Interest

It is a wise financial decision because cardholders can use the credit card while still earning interest on their fixed deposit.

Accessibility and affordability

The minimum FD amount needed for these cards often ranges from Rs. 10,000 to Rs. 20,000 and is within reach of most people. Because of this, FD Credit Cards are available to a wide range of consumers.

Rewards and Advantages

Like other credit cards, FD Credit Cards enhance user experience by providing a variety of perks, including cashback and reward points.

Interest-Free Interval

Most banks provide these cards with an interest-free period of 48 to 55 days, giving cardholders more financial flexibility.

Final Thoughts

Credit cards are likely to remain a preferred online and offline payment mode. Moreover, the rewards and cashback offers make them an attractive option. Applying for a secured credit card against a fixed deposit is one of the easiest ways to obtain one. However, it’s imperative to remember that you are pledging a fixed deposit as collateral. Therefore, banks may recover the outstanding balance from your FD account if you fail to pay your credit card bills, which can further damage your credit score.

FD credit cards are an excellent alternative for those who may find it difficult to obtain regular credit cards. An FD credit card is a tool to improve your credit score, which is essential to secure loans easily.

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