Home Banking News Credit Card Against FDs: A Smart Way to Build Your Credit Score and Earn Interest

Credit Card Against FDs: A Smart Way to Build Your Credit Score and Earn Interest

by Shatakshi Gupta

A credit card against fixed deposit (FD) is a type of secured credit card that is issued by a bank or a financial institution to a customer who has an FD account with them. The FD acts as a collateral or a security for the credit card, and the credit limit is usually a percentage of the FD amount. The customer can use the credit card for various purposes, such as online shopping, bill payments, travel bookings, etc., while earning interest on the FD.

Benefits of Credit Cards Against FDs:

Also Read: What are the benefits and risks of having multiple credit cards?

Some of the benefits of credit cards against FDs are:

Easy approval: Customers who have a low or no credit score, irregular income, or insufficient documents can easily get a credit card against FD without any hassle. The bank does not check the credit history or income proof of the customer, as the FD serves as a guarantee for the repayment.

Low fees and charges: Credit cards against FDs usually have lower fees and charges than regular credit cards, such as no joining fee, no annual fee, or low interest rate. This makes them more affordable and convenient for the customers.

Credit score improvement: Customers who use credit cards against FDs responsibly and pay their bills on time can improve their credit score over time. This can help them in getting better credit offers in the future, such as loans, mortgages, or unsecured credit cards.

Interest earning: Customers who opt for credit cards against FDs can continue to earn interest on their FDs while using the credit card. The interest rate on the FD is usually higher than the interest rate on the credit card, which means that the customer can earn more than they spend.

Drawbacks of Credit Cards Against FDs

Some of the drawbacks of credit cards against FDs are:

Low credit limit: Credit cards against FDs have a lower credit limit than regular credit cards, as they are based on the FD amount. The credit limit is usually 80% to 90% of the FD amount, which may not be sufficient for some customers who need more spending power.

Lien on FD: Credit cards against FDs are lien marked on the FD, which means that the customer cannot withdraw or close the FD until they clear their credit card dues. If the customer defaults on their payment, the bank can redeem the FD to recover the outstanding amount.

No reward points or cashback: Credit cards against FDs do not offer any reward points or cashback benefits to the customers, unlike regular credit cards. This means that the customers do not get any extra value or incentive for using the credit card.

How to Apply for a Credit Card Against FD?

To apply for a credit card against FD, the customer needs to follow these steps:

  • Open an FD account with the bank or financial institution that offers a credit card against FD. The minimum amount and tenure of the FD may vary depending on the issuer and the type of credit card.
  • Fill up an application form for the credit card and submit it along with the required documents, such as identity proof, address proof, PAN card, etc.
  • The bank will verify the details and approve the credit card application. The credit card will be issued and dispatched to the customer within a few days.
  • The customer can activate the credit card and start using it for their transactions.

Some of the best credit cards against FD:

SBI Card Unnati:

This SBI credit card comes with minimum  limit of Rs. 25,000. The annual fee is Nil for first 4 years, then Rs. 499. You’ll earn 1 point per Rs. 100 spent, save 5% on fuel, departmental stores and bill payments.

Kotak Mahindra Bank Aqua Gold Credit Card: This credit  card from Kotak Mahindra Bank comes with minimum Rs. 25,000 limit.    The annual fee of this card is Nil. You can get up to 4 free PVR tickets or 10,000 reward points on spending Rs. 1.5 lakh in a year.

ICICI Bank Instant Platinum Credit Card: This ICICI Bank card comes with minimum limit of Rs. 10,000. The annual charges are 0 for this card. You will collect 2 PAYBACK points per Rs. 100 spent, enjoy up to 15% dining discounts.

Axis Bank Insta Easy Credit Card: This Axis Bank card offers minimum Rs. 20,000. The Bank charges Nil for first year, then Rs. 500 from the next year. You’ll get up to 50 days interest-free period, save on fuel surcharge up to Rs. 400 per month.

Bank of Baroda Assure Credit: This card from Bank of Baroda offers minimum limit of Rs. 15,000. The bank charges 0 fee for first year, then Rs. 500 afterwards. Get one reward point per Rs. 100 spent, save on fuel surcharge up to Rs. 250 per month.


A credit card against FD is a good option for customers who want to avail a credit card without a credit history or income proof. It can help them in building their credit score, earning interest on their FD, and enjoying the convenience of a credit card. However, they should also be aware of the limitations of such a credit card, such as low credit limit, lien on FD, and no reward points or cashback. They should also compare the features and fees of different credit cards against FDs before choosing one that suits their needs and preferences.