May 21, 2025 · 10 mins read
Santosh Kumar
Credit cards are among the most widely used financial instruments in the contemporary financial industry. They provide flexibility, ease of use, and the opportunity to establish credit. However, it might be challenging for those with little or no credit history to be accepted for a conventional credit card. FD-backed credit cards are useful in this situation. These secured credit cards provide a safer way for people to build or raise their credit score since they are provided against a fixed deposit (FD) that acts as collateral. The idea is straightforward: while the FD continues to accrue interest, the applicant can use the credit card as usual, and the credit limit is often a proportion of the FD.
The main advantage of an FD-backed credit card is that it offers a great chance for those with bad credit or no credit history to obtain a credit card. Users may establish a solid credit history by using the card sensibly and paying on time. In addition to the advantage of establishing credit, the finest FD-backed credit card may offer rewards, cashback, and discounts on a range of goods and services.
A secured credit card provided by financial institutions secured by the applicant's fixed deposit with the bank is known as an FD-backed credit card. By serving as collateral to secure the credit card, the fixed deposit lowers the bank's risk. The card's credit limit is often expressed as a percentage of the FD. However, this can differ from bank to bank. A bank may, for instance, provide a credit limit of up to 90% of the FD amount. Since the FD still accrues interest, it's a comparatively low-risk choice for people who want a credit card but can't get an unsecured one because of their short credit history.
An FD-backed credit card is a straightforward and efficient approach for a lot of people to get started with credit. An FD-backed credit card provides a safe and dependable approach to establishing your credit record, regardless of your status as a student, stay-at-home mom, or new borrower. For people who want to raise their credit score but can't get standard credit cards, a best FD-backed credit card is perfect. Cardholders may greatly increase their creditworthiness by using their cards regularly and responsibly, which includes paying their bills on time and keeping their credit usage ratio low. An FD-backed credit card can, therefore, be a first step toward wider access to financial goods and financial independence.
The ability to establish credit history and raise credit score is one of the main benefits of utilizing an FD-backed credit card. Using such a card might be a great approach for those who have no credit history to begin building a credit profile. This aids in building a good credit history, which is essential for future applications for unsecured credit cards, mortgages, and loans.
Making all of your payments on time is crucial when using a credit card that is guaranteed by the Federal Reserve. Making late payments might harm your credit score and negate the benefit of using the card to raise your credit score. Users may demonstrate responsible financial conduct and improve their credit score by routinely paying off their credit card debt and avoiding high credit use. Additionally, many financial institutions give frequent credit reports to assist in tracking progress and confirming that the payments are being recorded appropriately, which further motivates consumers to keep on top of their financial responsibilities.
Because the best FD-backed credit card alternatives usually enable users to spend up to a certain amount, they make it simpler to manage debt and establish a positive credit history. People who want to repair their credit after experiencing financial hardships or making bad credit choices in the past may also benefit from it. Because of the fixed deposit's security, the bank will have a way to get its money back even if the cardholder defaults. Nonetheless, this is a great chance for consumers to raise their credit score over time and obtain better financial products, provided that the payments are handled properly.
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The fd-backed credit card is a desirable choice for people who want to establish or repair their credit history since it has a number of benefits. The simplicity of acceptance is one of the main advantages. Since the credit is secured against the FD, FD-backed credit cards are easier to get than unsecured credit cards, which demand a strong credit score and financial background. This can be a useful tool for those who have little or no credit history in order to obtain a credit card.
The fact that the FD still earns income despite being pledged as security is another important advantage of FD-backed credit cards. As a result, the cardholder continues to profit from the FD and does not miss out on its advantages. Another option for financial freedom is a credit card that is backed by the Federal Reserve. The cardholder may access the credit limit that the card offers, but they are unable to access the FD directly. Additionally, responsible card use guarantees that the card will raise the cardholder's credit score, which will open up more favorable financial options down the road.
To apply for an FD-backed credit card, people must fulfill certain eligibility requirements, which could differ somewhat between banks. Generally, candidates must have a current fixed deposit with the bank and be at least eighteen years old. Some banks demand a minimum deposit amount to be qualified for the best FD-backed credit card, and the amount of the FD sets the credit limit on the card. Applicants may be required to provide regular Know Your Customer (KYC) documentation, including verification of identification, residence, income, and a fixed deposit.
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1: If a person does not already have a fixed deposit with the bank, they must first open one.
2: After that, individuals may apply for the credit card by completing an application and sending in the required paperwork.
3: After evaluating the FD, the bank will provide a credit limit determined by the FD amount.
4: The applicant will receive the FD-backed credit card and, if it is authorized, be able to use it immediately.
Banks are more forgiving when granting these applications since the FD-backed credit card is secured against an FD. Remembering that the FD must be kept whole as collateral for the whole time the credit card is in use is crucial. Utilizing the card sensibly is crucial to guaranteeing that the FD continues to be a rewarding investment.
FD Minimum Credit Card Amount: ₹10,000
Credit Limit: FD value in full
Important attributes:
1: Free card for life
2: 4X reward points for each purchase
3: There is no FX markup on foreign transactions.
4: 100% cash withdrawal of FD value for a maximum of 45 days without interest
5: Interest rates on the fixed deposit can reach 7.25% annually.
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FD Amount Minimum: ₹15,000.
Credit Limit: 85% of the FD amount maximum
Important attributes:
1: Simple acceptance without proof of income
2: Points are awarded for qualified transactions.
3: Options for flexible repayments with SmartEMI
4: FD keeps making interest.
FD Amount Minimum: ₹50,000
Credit Limit: 85% of the FD amount maximum
Important attributes:
1: No yearly or joining costs
2: BookMyShow discounts
3: ICICI Bank Culinary Treats Program dining deals
4: Points that may be redeemed in a variety of categories
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FD Amount Minimum: ₹20,000
Maximum Credit Limit: 80% of the FD amount
Important attributes:
1: Immediate approval
2: 50 days of interest-free credit
3: No yearly or joining costs
4: Withdrawals of cash up to the whole credit limit
FD Amount Minimum: ₹25,000
Maximum Credit Limit: 80% of the FD amount
Important attributes:
1: For the first four years, there is no yearly charge.
2: One reward point for every 100 naira spent
3: Waiver of fuel surcharge
4: Transfer of balance on EMI options
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It's essential to consider several aspects when selecting an FD-backed credit card to ensure you're getting the most flexibility and value from your financial commitment. Examine the fixed deposit requirement first, since different banks have different minimum requirements, which might affect accessibility, particularly for students or first-time users. The best FD-backed credit card will retain transparency, offer low costs, and give competitive rates that make credit development reasonable. Next, pay attention to the interest rates, annual fees, and hidden charges. Additionally, you may select the finest FD-backed credit card that supports your credit journey and makes daily transactions more convenient and cost-effective by weighing rewards, advantages, and lifestyle perks like cashback, gasoline waivers, and dining discounts.
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Yes, as an FD-backed credit card is issued against your fixed deposit, you can apply for one even if you don't have a job or a salary. The greatest FD-backed credit cards with low income requirements are available from several institutions.
Of course. Even if your fixed deposit is connected to a credit card, the Federal Reserve guarantees, it still earns interest as usual. In part because of this, it is regarded as the greatest FD-backed credit card choice for novices.
You can ask for a larger credit limit on your FD-backed credit card by raising the amount in your fixed deposit. Several banks that provide the best credit cards guaranteed by the Federal Reserve also permit periodic limit reviews.
Yes, you may raise your credit score by using your FD-backed credit card responsibly, which includes making on-time payments and keeping your credit usage low. Because of this, it is frequently referred to as the greatest FD-backed credit card for credit development.
No, your FD is locked until you cancel or give up your FD-backed credit card. Certain banks permit early closure, but only after all outstanding balances on the finest FD-backed credit card have been paid off.
Depending on the network, most major banks' FD-backed credit card alternatives (Visa, MasterCard) are available for use abroad. When selecting the finest credit card with FD backing, look for this attribute.
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