Many people in India struggle to get their first credit card. Banks usually check your credit history before approving a credit card application. If you have no credit history or a low credit score, your application may get rejected.
This is where FD-backed credit cards become extremely useful. These cards are designed for beginners, students, or individuals who want to build or repair their credit score.
An FD-backed credit card is a secured credit card that is issued against a fixed deposit. Instead of relying on your credit history, the bank uses your fixed deposit as security. Because the bank already holds your deposit, the approval process becomes much easier.
These credit cards are one of the safest ways to start building a credit profile in India. In this guide, we will explain how FD-backed credit cards work, their benefits, and how you can choose the best one.
What Is an FD-Backed Credit Card?
An FD-backed credit card is a secured credit card that is issued against a fixed deposit placed with a bank.
When you open a fixed deposit, the bank offers you a credit card with a limit that is usually between 75 percent and 90 percent of the deposit amount.
For example, if you create a fixed deposit of ₹50,000, the bank may provide a credit card limit of around ₹40,000 to ₹45,000.
The fixed deposit acts as collateral for the credit card. If the cardholder fails to repay the credit card bill, the bank can recover the outstanding amount from the deposit.
Because the bank’s risk is lower, approval for FD-backed credit cards is usually very easy.
Who Should Use FD-Backed Credit Cards?
FD-backed credit cards are especially useful for people who have difficulty getting a traditional credit card.
These cards are suitable for students who have no credit history, individuals who are new to credit, or people who previously had a low credit score.
They are also helpful for people who want to rebuild their credit history after financial difficulties.
Using a secured credit card responsibly can gradually improve your credit score, making it easier to qualify for regular credit cards and loans in the future.
How FD Credit Cards Help Improve Credit Score
One of the biggest advantages of FD-backed credit cards is their ability to help build a strong credit profile.
When you use the credit card for purchases and pay the bill on time every month, the bank reports this positive payment behavior to credit bureaus.
Regular and timely payments improve your credit history and gradually increase your credit score.
Over time, a strong credit profile may allow you to upgrade to an unsecured credit card without needing a fixed deposit.
Benefits of FD-Backed Credit Cards
FD-backed credit cards offer several advantages for beginners.
The approval process is usually very simple because the bank already has the fixed deposit as security. In many cases, there is no requirement for income proof or previous credit history.
Another benefit is that your fixed deposit continues earning interest while acting as collateral for the credit card.
These credit cards also offer many of the same benefits as regular credit cards, including reward points, cashback offers, and online payment convenience.
Most importantly, they help establish a positive credit history, which is essential for future financial opportunities.
Best FD-Backed Credit Cards in India
Several banks in India offer credit cards against fixed deposits. Each bank has slightly different features, benefits, and requirements.
Some popular options include secured credit cards from major private and public sector banks. These cards usually provide basic rewards, online transaction capabilities, and international usage options.
The required fixed deposit amount varies by bank. Some banks allow deposits starting from ₹10,000, while others may require slightly higher amounts.
Choosing a card from a reliable bank with low fees and good customer service is usually a wise decision.
How to Apply for an FD-Backed Credit Card
Applying for an FD-backed credit card is a straightforward process.
First, you need to open a fixed deposit with a bank offering secured credit cards. The deposit amount depends on the bank’s requirements and the credit limit you want.
Once the deposit is created, you can request a credit card against that fixed deposit. The bank will process your request and issue the credit card linked to the deposit.
In many cases, the entire process can be completed online or through the bank’s mobile application.
Because the card is secured by your deposit, approval usually happens quickly.
Things to Remember When Using FD Credit Cards
Although FD-backed credit cards are easier to obtain, it is still important to use them responsibly.
Always pay your credit card bill on time to avoid interest charges and negative impacts on your credit score.
Try to keep your credit card usage below 30 percent of the available limit. Lower credit utilization helps maintain a healthy credit profile.
Avoid withdrawing cash from credit cards unless absolutely necessary, as cash withdrawals usually carry high interest charges.
Responsible usage will help you maximize the benefits of the card while improving your credit history.
Can You Close the FD and Keep the Credit Card?
Since the credit card is secured against the fixed deposit, the deposit usually remains locked as long as the card is active.
If you close the fixed deposit, the bank may cancel the credit card or require full payment of any outstanding balance.
Some banks may allow you to upgrade to a regular credit card after maintaining a good payment history for a certain period.
Once upgraded, the fixed deposit may be released depending on the bank’s policies.
Final Thoughts
FD-backed credit cards are an excellent financial tool for beginners and individuals with limited credit history. They offer a simple way to access credit while maintaining financial safety for the bank.
By creating a fixed deposit and using the credit card responsibly, you can build a strong credit profile and improve your financial credibility.
Over time, responsible credit usage can help you qualify for better financial products such as personal loans, home loans, and premium credit cards.
For anyone starting their credit journey in India, FD-backed credit cards provide a safe and practical first step toward building a strong financial future.
