October 16, 2025 · 9 mins read
Santosh Kumar
In today's world, credit cards have become a financial necessity as they provide convenience, flexibility, and an option to manage expenses wisely. But what if you are not able to secure a conventional credit card due to a low income, no credit history, or a low credit score? This is where a secured credit card — one that is linked to a Fixed Deposit (FD) comes into play. These secured credit cards are gaining popularity among new employees, students, and people trying to rebuild their credit. One of the more common questions that these consumers ask is, "How much FD is needed for a credit card?"
When a credit card is issued against an FD (or secured credit card), it is offered by a bank that is protected by your fixed deposit. Instead of looking at your income or credit score, the bank will use a fixed deposit to protect against the risk of lending you money.
If you are unable to repay the outstanding dues, the bank can liquidate the Fixed deposit you pledged to pay for the outstanding balance. This arrangement provides some assurances to both the customer and the bank.
Banks tend to be conservative when it comes to unsecured credit cards, due to the high likelihood of default. When a card is linked to an FD, the bank has a 'buffer' or 'safety net', hence a secured credit card will usually be easier to be approved for. Some reasons banks push these cards are:
1: It allows someone with no credit history to establish one
2: It encourages responsible lending practices
3: It gives the chance to individuals with low scores or no scores, to validate their ability to pay
4: It adds value to a customer who already holds an FD
Therefore, a secured credit card is both a safety net for the bank and an instrument for customers to lay the groundwork and verification for better financial credibility.
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The amount required for the FD will depend on the credit limit you are expecting and the bank's policy. However, typically, banks will extend a limit between 75% and 90% of the FD amount. Therefore, the minimum FD required typically is dependent on your expected limit; however, we won't do any serious calculations here, but generally, the minimum FD they will likely require would be around ₹10,000 to around ₹25,000 for a secured credit card.
The FD amount can vary according to the bank itself, the relationship with that bank, and the type of card you intend to apply for. Some banks issue entry-level secured cards with low FDs, while some premium cards, which have additional perks, require larger deposits.
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There are many reasons that may impact the FD amount needed for a credit card. Here are the most important factors:
1: Banks' Policies: Every bank has different requirements for minimum FD amounts and percentages that will translate into the credit limit. Some banks may require more of a deposit to ensure repayment.
2: Type of Card: The type of card you apply for also influences the amount of FD. A basic card should require a smaller FD, while a card that has travel rewards or cashback benefits should require a larger deposit.
3: Credit Limit Expectations: It is also important to note that your expected spending limit will also guide the FD amount. Basically, the more you wish to spend, the more FD will be needed.
4: Bank-Client Relationship: If you are a customer of the bank and have a longstanding FD or Savings Account, the bank may provide looser conditions or lower amounts of FD, deposits, or more available options for credit cards.
5: Repayment History: If you have held a secured card before, or you have demonstrated responsible financial behaviours, the bank may be able to offer a card with a lower FD.
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There are several benefits to having a secured credit card that is supported by a fixed deposit (FD):
Easy Approval: You can have an easy approval process regardless of whether you have poor or no credit history
Credit Improvement: If you make payments promptly, you can build or repair your credit history.
Interest on FD: Your FD continues to earn interest when you link your FD, which is not an option for the card to earn interest.
Custom Limit: Your spending limit will be determined by the amount of the fixed deposit you make.
Upgrade Your Card: You can upgrade the card to an unsecured card once you establish a favorable credit history.
Lower Default Risk: Because your spending is to your FD, it encourages a responsible spending practice.
1: Open a Fixed Deposit Account: You may either open a new FD account or you can use an existing one. Just make sure that the amount and period meet the requirements of the bank.
2: Request a Credit Card: You can either go to a bank branch or ask for a card online through the bank's website or banking app.
3: Documentation and Verification: Once you submit the necessary documents, the bank will verify that you agree to their terms.
4: Credit Card Delivery: After approval, the card is typically issued within a few working days. Your FD is lien-marked, meaning that you cannot access your FD withdrawal until your credit card account is either closed or converted to an unsecured credit card account.
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FD Duration: Your credit card is valid while the FD account is active. If your FD matures and you don't renew the FD account, your credit card will be deactivated.
Payment Expectations: If you do not make your dues payment on time, it may result in the liquidation of your FD.
Changes to Credit Limits: If you decide to add funds or renew the FD, you can also request an increase to the credit limit.
Interest Repayment: Even while your FD is lien-marked, you will earn the normal interest on it. Premature Liquidation: If you withdraw funds from your FD before the lock-in period, it may incur penalty fees or cancellation of your credit card.
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A secured credit card is a suitable choice for:
1: First-time users of a credit card who want to establish his or her credit history.
2: Students and young workers are not able to provide stable income proof.
3: People with a low credit score or people who want to repair their credit score.
4: Payment card user, either for a salary job or self-employed, who doesn't want to share their main income.
5: A retired person who gets money from savings from FDs but has limited access to an unsecured credit source.
When you have a secured credit card, it works the same as a regular credit card - you can make purchases, and pay those bills on time. Each transaction and each payment you make is reported to the credit bureaus, such as CIBIL.
When you pay your bills on time and have a low credit utilization ratio over time, this will lead to building your credit score over time. And once you are able to use your secured credit card responsibly for 6 months to 12 months, you can become eligible for a regular unsecured credit card, where the limits will also increase, along with benefits.
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Despite secured and unsecured credit cards having comparable features, secured credit cards have added benefits:
No Income Eligibility Verification: No salary slips or income tax returns are needed.
Guaranteed Approval: Approval is almost assured, as long as you can provide proof of underlying security (e.g., a Fixed Deposit Account (FD)).
Lower Credit Risk: As the credit limit is predicated upon such underlying security, it is less likely that you will overextend your purchases and accumulate a large balance.
Interest Earned: Your investment in the underlying security will continue to earn interest; you don’t earn interest with the average credit card.
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To issue a secured credit card, most banks require a minimum FD of ₹10,000 to ₹25,000, subject to the bank's discretion.
Yes. Your FD continues to earn interest at the same rate, even if it is lien-marked against the credit card.
You can, however, it is not recommended. Breaking an FD early usually levies penalty charges, and the credit card will be terminated.
Absolutely. Making timely repayment regularly will create a positive credit history and eventually improve your credit score.
Yes, you can increase your credit limit if you add funds to the FD or if you renew your FD.
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