October 15, 2025 · 8 mins read
Santosh Kumar
In the current world, credit cards have evolved into a financial necessity, providing convenience, rewards, and flexible usage for online and offline spending. There are several reasons why someone may not be eligible for a regular credit card. Regular credit cards depend on several factors, including steady income, a good credit score, and a strong financial background as assessed by the bank and its policies.
So, for example, if you are a new worker, student, homemaker, or someone working to rebuild a damaged credit score, FD credit cards or secured credit cards would be your best option. FD credit cards provide you with a secure gateway to obtain credit without eligibility requirements being a condition of approval.
But how does the FD credit card work? In this article, we will discuss everything you need to know about how FD credit cards work, the benefits and limitations, and how FD credit cards can assist you in building your credit journey from scratch.
An FD credit card(Fixed Deposit Credit Card) is a secured credit card that is issued against a fixed deposit that you hold with a financial institution.
Typically with regular credit cards, the bank gives you credit, and there is no backing of collateral, and takes into consideration your income and credit repayment history with that institution. With an FD credit card you have collateral, your credit card limit is equal or close to the amount you have on fixed deposit with the bank.
You'll deposit a certain amount as a fixed deposit (FD) (e.g., ₹10,000 or ₹25,000, etc.), and in turn, the bank will give you a card with a limit based on a percentage of that FD's value, usually 75% to 90% of the value of that deposit.
The use of this card will be just like any other credit card, for purchases, bill payment, online shopping, and so forth, the only difference is how you secure and utilize the credit when you're using the card.
You may be wondering why banks would offer such products. The answer is simple, mutual benefit. For banks, FD credit cards are low-risk. Since the credit is backed by your own money, there is little risk of the bank having to deal with default. Even if you don't pay them back, they can take the outstanding amount from your FD. And for you, it is a simple and easy way to:
1: Get into the credit system
2: Learn responsible usage of credit
3: Build a positive credit score
4: Receive rewards when using the card
Also Read: Difference Between Annual Fee and Joining Fee
Although features vary from one bank to another, the following are some key features shared by most FD credit cards in India:
1: Minimum FD requirement: Typically, the minimum FD requirement is between ₹10,000and ₹25,000
2: Credit Limit: Credit is usually between 75%-90% of the FD value
3: Interest Earnings: The FD continues to earn regular interest
4: Tenure: The credit is linked to the tenure of the FD (Usually 6 months to 5 years)
5: Interest Free Period: The card has an interest free period of around 45-55 days from the date of purchase
6: Rewards and Benefits: Similar to a regular credit card, there are broadly rewards/rebates, and exclusive offers
There are diverse reasons why FD credit cards are increasingly popular in India. Here are advantages to consider.
1: Easy Approval - You do not need either a high income or a clean credit history to get approved. As long as you can create the FD, the bank will issue you the credit card
2: Perfect for Building Credit - This may be the most important advantage. If you have never used a credit card before or if your credit score is poor, an FD credit card can help you to rebuild trust with lenders to obtain a better score with repayment.
3: Interest Income on FD - Your FD continues to earn interest in income. Your money is not working for you without it being idle.
4: No Need to Verify Your Income - Most banks don’t have any verification of income, no salary slips, no tax returns, or any other income documents, making it a good choice for students, homemakers, freelancers, and self-employed individuals.
5: Similar Benefits to Regular Credit Cards - You will get the similar benefits associated with a regular credit card such as reward points, cash back, dining incentives, and offers.
6: Potential Upgrade - Once you have a healthy credit history, you will be able to get an upgrade to an unsecured credit card with a higher limit and advantages.
Also Read: Foreign Transaction Fees on Indian Credit Cards
1: Create a New or use an Existing FD: Create a fixed deposit with the banks or use an existing one that meets their criteria.
2: Submit the Card Request: Make an application for the card against the FD—most banks provide this request option online.
3: Submit KYC Documents: Submit proof of identity, address, and PAN card proof.
4: Receive Your Card: After documents are verified—the bank lien marks your FD, and in a few working days, the credit card arrives at your home.
Everyone wants to have a good credit score, but it doesn’t usually happen overnight. It is built over time through continual and responsible spending. A FD credit card can help you build your credit over time because it:
1: Reports your spending: Credit bureaus are notified each billing cycle of your spending.
2: Rewards paying on time: Paying your bills on time will increase your score.
3: Shows responsible credit usage: Low credit utilization indicates responsible credit usage.
4: Builds a payment history: Even a couple of months of proper usage can build a payment history to show you are creditworthy.
If you pay on time and do not owe excessive payments, you can see some significant increases in your credit score within six months to one year.
Also Read: What credit card has no annual fee for students?
If you want to maximize the use of your FD credit, you must practice using the card responsibly by:
1: Pay the bills in full every month and on time.
2: Avoid exceeding 30% of your limit.
3: Keep track of your spending, so you don’t go above your monthly limit.
4: Review your credit report every few months.
5: Renew your FD before the maturity date to avoid the card being canceled automatically.
An FD credit card also is the best option to balance opportunity with protection. You get the value of a credit card, while your savings are protected in a fixed deposit. This is a great choice for someone using credit for the first time, and for individuals with limited proof of income, or someone working to improve a credit score. If you use the card responsibly, pay your bills on time, keep your credit card utilization low, and continue to renew your FD, you can eventually transition to an unsecured credit card with increased limits and enhanced benefits. By knowing how an FD credit card works, you can be proactive with your card usage, leveraging your savings as a means of growing your wealth, and building long-term credit success.
Many banks will require an FD of ₹10,000 to ₹25,000. This amount will vary depending on the bank and type of FD credit card.
Yes, the fixed deposit ledger will continue to earn interest from the bank at its rate, even when it is lien marked to secure a credit card.
Yes, technically, but you may face penalties, and your credit card will also close [perform closure] immediately since the FD is collateralized.
Your payments and responsible use are reported to credit bureaus and will boost your score as time goes on.
Yes, after consistent usage for 6-12 months with payments made on time, you would want to request the bank to move your FD-backed card to an unsecured credit card.
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