Credit card against FD

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 the applicant’s credit score and gross income. They are also called unsecured credit cards since no collateral is on them. 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 more in a fixed deposit will give you a higher credit card limit. Almost all prominent banks in India offer credit cards against fixed deposits.

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

• It requires minimal documentation and 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.

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

Getting a credit card is an ideal choice for those who:

• Need a credit card but are unable to get one the traditional way
• Have an irregular income
• Have a poor credit history/no history 
• Do not have income proof
• Have an entry-level job (with low income)

Here are some of the key benefits of having a credit card against FD:

• The credit limit is not determined by the bank but rather by the amount of the FD deposit (typically 80% to 90%).
• Some banks charge a low fee or no fee at all.
• Interest rates are lower than for unsecured credit cards.
• No proof of income or credit score is required, but a good credit score can be built by using the card responsibly.
• The paperwork is fairly simple.

For non-FD accountholders

• To apply for a secured credit card, you must have a fixed deposit account with the respective bank. Hence, you need to either open an FD online or visit the nearest bank branch to open your FD account first, followed by the credit card account.
• While some credit cards are issued as complimentary for having an FD with the bank, others need to be applied for.
• Once you open your fixed deposit account with the bank, you can apply for a credit card at the same branch by filling out the application form.
• You can also apply for the secured credit card online once your FD account becomes active.
   

For FD account holders

• If you already have a fixed deposit account with the bank from which you would like to avail the secured credit card, you can apply online by visiting the bank’s website.

Here are the details of credit cards against FD offered by a few prominent banks in India:

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 must open one. While opening an FD account with a bank, you must submit documents such as your identity ( Aadhar card, PAN card, Voter ID Card, passport, electricity bill) and address proof ( Aadhar card, driving licence). 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

Credit cards are likely to remain a preferred mode of payment both online and offline. 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 serves as a tool to improve your credit score, which is essential to secure loans easily.