A credit card against your fixed deposit (FD) is a secure way to get a credit card. Itโs called a โsecuredโ credit card because your FD acts as collateral. This makes it easy to get a credit card even if you have a low credit score or no income proof. Itโs a great tool for people who want to build or improve their credit score and need a financial cushion.
How Does a Credit Card Against FD Work?
With a credit card against FD, you can spend money from your fixed deposit and pay it back later. The credit limit is usually 75% to 85% of your FD amount. The higher your FD, the higher your credit card limit.
Why Apply for a Credit Card Against FD?
1. No Proof of Income Needed
If youโre a salaried professional with a low income, a homemaker, a student, or someone without steady income, getting a regular credit card can be tough. A secured credit card against FD doesnโt require income proof. The bank uses your FD as security.
2. Lower Interest Rates
Regular credit cards often have high interest rates, making it hard to pay back if you donโt have a steady income. Credit cards against FD have much lower interest rates. You can spend your own money and pay it back without worrying about high extra charges.
3. Improve Your Credit Score
Using a secured credit card responsibly helps build your credit score. This makes it easier to get other loans or credit cards in the future. A good credit score can also help you get better interest rates on loans.
4. Minimal Paperwork
Applying for a regular credit card involves a lot of paperwork and verification. With a credit card against FD, the process is simple and quick. You donโt need to run around for documents or spend hours on formalities.
5. Cashbacks and Interest-Free Periods
Many banks offer cashbacks and coupons for purchases made with a secured credit card. Most also provide an interest-free period, usually 48 to 55 days, so you can pay your bill without extra charges.
Things to Remember
- Your FD is held as security. If you fail to pay your credit card bill, the bank can use your FD to cover the dues.
- Most banks require your FD to be active for 6-8 months before you can apply for a secured credit card.
- You continue to earn interest on your FD while using the credit card.
Who Should Get a Credit Card Against FD?
- People with low or no credit score
- Homemakers and senior citizens
- Non-salaried professionals
- Students and first-time credit card users
Final Thoughts
A secured credit card against your FD is a smart financial tool. It offers easy approval, lower interest rates, and helps build your credit score. Itโs perfect for those who want the benefits of a credit card without the hassle of income proof or high interest rates. Just remember to use it responsibly to avoid any financial trouble.
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