Credit Card Against Fixed Deposit: Meaning, Benefits & How It Works

Credit Card Against Fixed Deposit is a smart option for people who want a credit card but don’t meet the eligibility criteria for a regular one. If you’re new to credit cards, have a low CIBIL score, or don’t have a steady income proof, this type of card can make things much easier. In simple terms, a credit card against FD is issued by keeping your fixed deposit as security with the bank. Because the card is backed by your own money, banks are more willing to approve it even for beginners. You still get to use the card like a normal credit card for shopping, bill payments, and online transactions, while your FD continues to earn interest.

In this blog, we’ll explain what a credit card against fixed deposit is, how it works, its key benefits, charges, and whether it’s the right choice for your financial needs.

What Is a Credit Card Against Fixed Deposit?

A credit card against fixed deposit is a type of secured credit card that is issued by a bank by keeping your FD as security. Instead of checking your income or credit score, the bank uses your fixed deposit as collateral to approve the card.

Main Difference Between a Credit Card Against FD and a Regular Unsecured Credit Card

Basis	Credit Card Against FD	Regular Unsecured Credit Card
Risk for the Bank	Low risk, as the fixed deposit acts as collateral	Higher risk, since no collateral is involved
Approval Basis	Based on FD amount rather than income or CIBIL score	Based on income level and CIBIL score
Approval Ease	Easy approval, suitable for beginners and low credit score users	Approval can be difficult for first-time or low-score applicants

Since the FD works as collateral, these cards are also called secured credit cards. Your fixed deposit remains with the bank and continues to earn interest while you use the credit card.

How Does a Credit Card Against Fixed Deposit Work?

The working of a credit card against FD is simple and beginner-friendly. Here’s how the process usually works:

1. Open a Fixed Deposit with the Bank
You first open a fixed deposit with the bank offering an FD-backed credit card. Most banks require a minimum FD amount, which can vary from bank to bank.

2. Apply for a Credit Card Against the FD
Once the FD is created, you apply for a credit card against it. Many banks allow this through internet banking, mobile apps, or a branch visit.

3. Credit Limit Is Linked to the FD Amount
Your credit limit is usually a percentage of your FD value generally around 75% to 90% of the fixed deposit amount.

4. Use the Card Like a Regular Credit Card
You can use the card for online shopping, POS payments, bill payments, and subscriptions, just like a normal credit card.

5. Repay Your Monthly Credit Card Bills
You need to pay your monthly credit card bill on time. If you pay in full, you avoid interest charges and build a positive credit history.

6. FD Remains Locked During Card Usage
Your fixed deposit stays locked as long as the credit card is active. If you fail to repay dues, the bank has the right to recover the amount from the FD.

Credit Limit on Credit Card Against Fixed Deposit

The credit limit on a credit card against fixed deposit is directly linked to the amount of FD you keep with the bank. In most cases, banks offer a credit limit of 75% to 90% of the FD value. For example, if you open an FD of ₹1,00,000, your credit limit may range between ₹75,000 and ₹90,000.

Factors That Affect the Credit Limit

• FD Amount
  A higher fixed deposit usually means a higher credit limit. Banks calculate the limit as a percentage of the FD value.

• Bank Policy
  Each bank has its own internal rules. Some banks offer up to 90% of the FD value, while others keep it lower to reduce risk.

• Card Variant
  Basic cards usually come with lower limits, while premium or co-branded cards may offer a slightly higher limit against the same FD amount.

Interest Rate & Charges on Credit Card Against Fixed Deposit

Even though the card is backed by a fixed deposit, it works like a regular credit card when it comes to interest and charges.

1. Interest Rate on Unpaid Dues

If you don’t pay the full outstanding amount by the due date, interest is charged on the unpaid balance. This interest rate is usually similar to regular credit cards and can range from around 30% to 42% per annum, depending on the bank and card type.

2. Annual or Joining Fee

Some banks offer lifetime-free credit cards against FD, while others may charge a small joining or annual fee. The fee depends on the card variant and bank policy.

3. Late Payment Charges

If you miss the due date, the bank may apply late payment fees, which increase with the outstanding amount. Late payments can also negatively impact your CIBIL score.

4. FD Interest vs Credit Card Interest

Your fixed deposit continues to earn interest as per FD rates, but this interest is much lower than the interest charged on unpaid credit card dues. This means it’s always better to pay your credit card bill in full and on time, rather than relying on FD interest to offset card charges.

Best Credit Cards against Fixed Deposits in India for 2025

Following is a list of secured credit cards offered by some major banks in India, with important features:

A credit card against fixed deposit comes with several practical benefits, especially for people who find it difficult to get a regular credit card.

• Easy Approval Without Income Proof
  Since the card is secured against your FD, most banks do not ask for salary slips or income documents. The FD itself is enough to get approval.

• Ideal for Low or No Credit Score Users
  This type of credit card is perfect for beginners or users with no credit history, as banks focus more on the FD amount than your CIBIL score.

• Helps Build or Improve CIBIL Score
  Regular usage and on-time repayments are reported to credit bureaus. Over time, this helps you build a strong credit history or improve an existing low score.

• Lower Risk for Banks
  Because your fixed deposit acts as collateral, the bank’s risk is minimal. This is the main reason approvals are faster and easier.

• Access to Basic Card Rewards & Offers
  Even though it’s a secured card, you still get benefits like reward points, discounts, cashback offers, and online shopping deals, depending on the card.

Who Can Get a Credit Card on FD in India?

The following individuals can get a credit card against a fixed deposit account in India:

• Individuals with Low Credit Scores: Those who have a low credit score or no credit history can benefit from this type of card.

• New to Credit: Individuals who are new to credit and do not have an established credit history.

• Existing FD Holders: Customers who already have an FD with the bank can easily get a credit card against it.

• Students and Homemakers: Those who might not have a regular income but have a fixed deposit can apply.

• Blacklisted Employees or Residents: Employees of an organization that is blacklisted by the bank can still apply for a credit card if they have an FD in the bank. Similarly, people in an area that is restricted or blacklisted by the bank can apply for a credit card against an FD account in that bank.

This makes a credit card against fixed deposit a reliable stepping stone toward better financial access and stronger credit health.

Credit Card Against Fixed Deposit vs Regular Credit Card

A credit card against FD and a regular credit card may look similar in usage, but they differ significantly in approval, risk, and flexibility.

1. Approval Criteria

A credit card against FD is approved based on the fixed deposit amount kept as security. Income proof and CIBIL score are usually not mandatory.
A regular credit card, on the other hand, is approved based on your income, employment status, and credit score.

2. Credit Limit

In an FD-backed credit card, the credit limit is generally 75%–90% of the FD value.
With a regular credit card, the limit is decided by your income profile and credit history and can be much higher for eligible users.

3. Risk and Flexibility

The risk for the bank is lower in a credit card against FD because the FD acts as collateral, but your flexibility is also limited since the FD remains locked.
Regular credit cards carry higher risk for banks but offer more flexibility, higher limits, and access to premium cards.

4. Fees and Rewards

Credit cards against FD usually have lower or no annual fees, but rewards and benefits are basic.
Regular credit cards may have higher fees, but they often come with better rewards, cashback, lounge access, and lifestyle benefits.

Credit Card Against Fixed Deposit vs Overdraft on Fixed Deposit

Both options use a fixed deposit as security, but their purpose and usage are very different.

1. Purpose and Usage

A credit card against FD is meant for regular spending, online payments, subscriptions, and building a credit score.
An overdraft on FD is designed for short-term cash needs, where you withdraw money directly from your bank account.

2. Interest Cost

With a credit card against FD, interest is charged only if you don’t pay the full bill, and it can be high if dues are carried forward.
In an overdraft on FD, interest is charged only on the amount used and is usually FD rate + 1% to 2%, making it cheaper for short-term borrowing.

3. Impact on Credit Score

Responsible usage of a credit card against FD helps build or improve your CIBIL score.
An overdraft on FD usually does not contribute to credit score improvement, as it is not always reported like a credit card.

4. When to Choose Which Option

Choose a credit card against FD if you want to build credit history, make regular payments, and enjoy card-based offers.
Choose an overdraft on FD if you need quick cash for a short period and want to pay lower interest without worrying about rewards or credit score.

What Happens to FD If You Default on Credit Card Payment?

If you fail to repay your credit card dues on time, the bank has certain rights because your fixed deposit is pledged as security.

1. Bank’s Right to Adjust Dues From FD

In case of continued non-payment, the bank can recover the outstanding credit card amount from your FD. This may involve partially or fully breaking the fixed deposit to settle the dues, including interest and penalties.

2. Impact on Credit Score

Even though the card is secured, missed or delayed payments are reported to credit bureaus. This can negatively affect your CIBIL score and make it harder to get unsecured credit cards or loans in the future.

3. Early FD Closure Implications

If the bank breaks your FD to recover dues, it is treated as premature FD closure. This may lead to:

• Reduced interest earnings

• Penalty on premature withdrawal (as per bank policy)

• Loss of the credit card once the FD is closed

This is why timely repayment is important, even with an FD-backed credit card.

Banks Offering Credit Card Against Fixed Deposit in India

Many major banks in India offer credit cards against fixed deposits. Below are some popular options along with indicative minimum FD requirements (these may vary by card and bank policy):

Note: Minimum FD amount, credit limit percentage, and fees may change based on bank policies and card variants. Always check the latest details on the bank’s official website or branch before applying.

How to Apply for a Credit Card Against Fixed Deposit

Applying for a credit card against fixed deposit is simple and usually faster than applying for a regular credit card. You can apply either online or by visiting a bank branch.

Online Application Process

• Log in to the bank’s internet banking or mobile app

• Choose the option for credit card against FD or secured credit card

• Select or create a fixed deposit for the required amount

• Choose the card variant and confirm details

• Complete OTP or e-KYC verification

• Submit the application

Many banks instantly approve the card once the FD is created.

Branch Application Process

• Visit the nearest bank branch offering FD-backed credit cards

• Open a fixed deposit (if you don’t already have one)

• Fill out the credit card application form

• Submit required documents and sign the FD lien form

• Bank processes and approves the card

This method is helpful if you prefer in-person assistance.

Documents Required

Most banks ask for minimal documentation, such as:

• Identity proof (Aadhaar, PAN, Passport, or Voter ID)

• PAN card (mandatory)

• Passport-size photograph (in some cases)

Income proof is usually not required.

Approval Timeline

Approval is generally quick, often within 1–3 working days. In some banks, the credit card is approved instantly once the FD is linked, and the physical card is delivered within a few days.

Pros of Credit Card Against Fixed Deposit

Like any financial product, a credit card against FD has its advantages and limitations.

1. Guaranteed Approval
   Since the card is backed by a fixed deposit, approval chances are very high.

2. Credit Score Improvement
   Timely payments help build or improve your CIBIL score over time.

3. Simple Eligibility
   No income proof or high credit score is required, making it beginner-friendly.

Cons of Credit Card Against Fixed Deposit

1. FD Remains Locked
   Your fixed deposit cannot be freely withdrawn while the credit card is active.

2. Lower Credit Limit Than Unsecured Cards
   The limit is restricted to a percentage of your FD amount.

3. Limited Premium Benefits
   Most FD-backed cards offer basic rewards and fewer lifestyle benefits compared to premium unsecured cards.

This balanced view helps you decide whether a credit card against fixed deposit fits your financial needs.

FAQs Related To Credit Card Against Fixed Deposit

Q1. Which bank gives a credit card against a fixed deposit?

Ans: There are a number of banks that offer credit cards against fixed deposits. Some of the best credit cards against fixed deposits are mentioned below:

• SBM Paisabazaar Step UP Credit Card
• SBI Unnati Credit Card
• Kotak Mahindra Bank Aqua Gold Credit Card
• ICICI Instant Platinum Credit Card
• Axis Bank Insta Easy Credit Card
• Bank of Baroda Assure Credit Card

Q2. What is the difference between an unsecured credit card and a credit card against FD?

Ans: An unsecured credit card is one that is issued without collateral. Such cards charge high fees and are offered only to those who meet the concerned bank’s eligibility criteria. Also, a good credit score and a regular income source are two vital factors for getting an unsecured credit card.

Whereas a credit card against FD is a secured credit card, i.e. it is a lien marked against a fixed deposit. This FD is maintained in the concerned bank which issues this type of credit card. Factors like low/no credit score or no income proof do not affect such a card’s eligibility criteria.

These cards are easy to acquire and do not charge hefty fees. In case of a default from the card holder’s side, the bank reserves the right to settle missed/late payments by redeeming the lien marked fixed deposit.

Q3. Can foreigners get a credit card against FD?

Ans: No. Banks do not extend this facility to foreign nationals.

Q4. Can I get 100% of my FD amount as a credit card limit?

Ans: Generally, banks provide up to 80% of the fixed deposit amount as the credit limit.

Q5. Can I use my credit card against FD to withdraw cash at ATMs?

Ans: Yes. Most of the banks allow ATM withdrawals. Credit cards against fixed deposits are secured credit cards issued against the Fixed Deposit of an applicant. The credit limit on these cards is usually 80%-90% of the FD amount.

Q6. I do not have income proof. Can I get a credit card?

Ans: Yes. If you have a fixed deposit and your bank gives a credit card against it, you can go ahead and get a credit card against FD.

No income proof? Apply for Step UP Credit Card, here.

Q7. What is the minimum Fixed Deposit amount for a credit card?

Ans: The minimum fixed deposit amount for a secured credit card varies from one bank to another. SBM Bank (India) Ltd. with Paisabazaar as co-branded partner offers a Credit card against FD (Step UP Credit Card) with a minimum deposit amount of Rs. 2,000.

Conclusion

Credit cards against FDs can be a great option for you if you may not be eligible for a traditional credit card due to low credit scores or lack of income proof. They offer several advantages, such as lower interest rates, the ability to earn interest on your fixed deposit while using it, and improving your credit score. Plus, they’re backed by a safe investment choice, which makes them a no-risk option. And the best part is that you can use your fixed deposit for spending while it continues to earn interest!