Credit Card against Fixed Deposit

A Credit Card against Fixed Deposit (FD) is a secured credit card linked directly to a fixed deposit account held by the cardholder. This type of credit card is particularly beneficial for individuals who might not qualify for a standard credit card due to insufficient credit history or low credit score. The credit limit on such cards is typically a percentage of the FD amount, reducing the risk for issuers and making approvals easier and faster. It serves as a tool for building or improving one's credit score while ensuring the credit provider's funds are safeguarded.  

What is a Credit Card against Fixed Deposit?

A Credit Card against Fixed Deposit (FD) is a form of secured credit card where the credit limit granted to the cardholder is backed by a fixed deposit made with the issuing bank. This arrangement minimizes the risk for the bank and allows individuals with no credit history or a low credit score to access credit facilities. Typically, the credit limit is set at a certain percentage of the FD amount, ensuring that the bank has a buffer in case of defaults.
These cards are ideal for newcomers to credit, as they can help build or repair credit scores effectively. On-time payments are reported to credit bureaus, improving creditworthiness over time. For the cardholder, this type of credit card offers the dual benefit of credit accessibility and earning interest on their fixed deposit, making it a financially prudent choice.

How does FD act as collateral to avail a secured credit card?

A Fixed Deposit (FD) acts as collateral for a secured credit card by providing the issuing bank with a security against the credit extended. The bank holds the FD and if the cardholder defaults on their credit card payments, the bank can recover the dues by liquidating the FD. The credit limit on the card is usually a significant percentage of the FD amount, ensuring the bank has a secure way to mitigate potential losses. This arrangement allows individuals with limited or poor credit history to obtain a credit card, helping them build or improve their credit score.

Best Credit Cards against FD in India

Eligibility Criteria for a Credit Card against a FD

To be eligible for a Credit Card against a Fixed Deposit (FD), applicants must first have a fixed deposit with the issuing bank. Key criteria include a minimum FD amount set by the bank, which varies between institutions. The applicant should be at least 18 years old, although the upper age limit can vary. Additionally, the FD must remain active and under lien throughout the credit card's tenure. Importantly, the applicant does not need a prior credit history, making this a viable option for new credit users or those looking to rebuild their credit scores.

Who Can Apply For Credit Card against FD

Anyone with a fixed deposit in a bank can apply for a Credit Card against that FD, making it an accessible option for a wide range of individuals. This includes people with no credit history, such as students or new employees, and those looking to rebuild a poor credit score. The primary requirements are maintaining the minimum FD amount stipulated by the bank and ensuring the deposit is held for the duration of the credit card's active period. Applicants must be at least 18 years old, with the upper age limit varying by bank.

Features of a Credit Card against FD Online

Features of a Credit Card against FD Online:
1. No Income Proof Required: Ideal for individuals without a steady income or payslips.
2. Instant Approval: Quick and easy online application process due to the FD serving as collateral.
3. Credit Limit: Up to 85% of the FD amount as a credit limit.
4. Online Account Management: Easy tracking and handling of transactions and payments.
5. Interest Rate: Competitive interest rates, generally lower than unsecured credit cards.
6. Credit Building: Timely payments contribute to a positive credit score.
7. Reward Programs: Access to rewards, cashback, and discount offers.
8. Enhanced Security: Includes security features like SMS alerts and chip-based cards.
9. Global Acceptance: Can be used domestically and internationally wherever credit cards are accepted.
10.  Emergency Credit Access: Provides a credit line in times of urgent need, backed by the FD.

Benefits of Credit Card against Fixed Deposit (FD)

Benefits of a Credit Card against Fixed Deposit:
1. Easy Approval: Even with a low credit score, approval is more likely due to FD collateral.
2. Credit Building: Ideal for establishing or improving credit history.
3. Lower Interest Rates: Typically offers lower interest rates than unsecured credit cards.
4. No Income Proof Needed: Approval doesn't require income verification, benefiting students and homemakers.
5. Quick Processing: Faster card issuance due to pre-existing FD security.
6. Credit Limit Flexibility: Credit limit is a high percentage of the FD amount.
7. Interest Earnings: FD continues to earn interest while serving as collateral.
8. Reward Points: Access to rewards, cashback, and discount programs.
9. International Transactions: Can be used globally, subject to forex rates.
10. Secure Transactions: Enhanced security with chip and PIN technology.
11.     Emergency Fund Access: Acts as a ready line of credit in financial emergencies.

Documents Required for a Credit Card against FD

Fixed Deposit Certificate: Proof of the FD held with the issuing bank.
1. Application Form: Completed credit card application form provided by the bank.
2. Identity Proof: Government-issued ID like a passport, driving license, or Aadhaar card.
3. Address Proof: Recent utility bill, rental agreement, or passport for address verification.
4. PAN Card: For tax identification purposes.
5. Photographs: Recent passport-sized color photographs.
6. Age Proof: Document certifying the applicant’s age, such as a birth certificate.
7. FD Receipt: Bank-issued FD receipt or token.
8. Lien Authorization Letter: Authorizing the bank to mark a lien on the FD.
9. KYC Documents: As per the bank's KYC policy, which may include additional identification or address proofs.

How to Apply for a Credit Card on FD?

To apply for a Credit Card on a Fixed Deposit (FD), follow these steps:
1. Eligibility Check: Ensure you meet your bank's age and FD amount criteria.
2. Documentation: Gather necessary documents, including FD certificate, identity and address proof, PAN card, and photographs.
3. Application Form: Fill out the credit card application form provided by the bank, either online or in a branch.
4. Lien Mark: Grant the bank permission to mark a lien on your FD.
5. Submission: Submit the application form along with the documents to the bank.
6. Verification: Wait for the bank to verify documents and approve your application.
7. Card Issuance: Upon approval, the bank will issue the credit card against your FD.