October 13, 2025 · 9 mins read
Santosh Kumar
In India, credit cards have ended up a fundamental portion of advanced financial life. Whether it’s shopping online, paying bills, booking travel, or dealing with crises, they offer both comfort and financial adaptability. Be that as it may, not everybody meets the qualification criteria for a conventional credit card — particularly those who are modern to credit, have unsteady wage, or have a low credit score. To make credit get simpler and more comprehensive, banks have presented a shrewd elective — the FD-backed credit card, a sort of card connected to your fixed deposit.
Understanding what FD is in a credit card is vital, as it serves as a bridge for individuals who are unable to obtain unsecured credit cards. In this framework, the bank issues you a credit card by holding your Fixed deposit (FD) as security. It is a commonsense arrangement for first-time clients, students, specialists, and those revamping their credit history. Let’s delve deeper into how this works, its highlights, benefits, risks, qualifications, and everything else you should know.
When someone inquires about what FD is on a credit card, it essentially means a credit card issued against a Fixed deposit. In an FD-backed credit card, your Fixed deposit serves as collateral for the bank.
The bank places a lien on your FD, meaning you cannot withdraw or break it during the period it backs your credit card. In return, the bank issues you a credit card with a credit limit equal to a certain percentage of your FD sum — ordinarily between 70% and 90%.
In brief, FD on a credit card means your store is guaranteeing the credit line. If you default on or fail to pay your bills, the bank can recover its funds by liquidating your FD.
To get what FD is in a credit card, it makes a difference to know the step-by-step process behind it:
1: You open or take out a Fixed deposit with the bank.
2: The bank confirms your FD points of interest and marks a lien on it.
3: Based on your FD sum, the bank offers a credit card with a credit limit (typically 75%–90% of the FD value).
4: You use the credit card like a typical one for shopping, online payments, and cash payments.
5: Every month, you get a charge explanation. You must pay it on or sometime recently the due date.
6: If you fail to pay your contribution, the bank can recover the sum by selling your fixed deposit.
7: During this period, your FD proceeds are earning interest, indeed, even though they are pledged.
8: If you use the card consistently for a long time, a few banks may later allow you to convert it into a standard unsecured credit card.
This structure makes FD-backed credit cards a more secure income for both the bank and the customer.
Also Read: Difference Between Annual Fee and Joining Fee
Understanding what FD is in a credit card also implies being aware of its specific features. These cards come with terms marginally distinctive from standard credit cards:
1: Collateral Necessity: You require to open a Fixed deposit, which serves as security.
2: Interest on FD: Your FD proceeds earn the agreed interest upon lien marking.
3: FD as Security: Your settled store acts as a ensure, so it remains blocked until you near or completely reimburse the credit card.
4: Annual Expenses: Banks regularly offer lower or indeed deferred yearly/joining expenses for these cards, making them more reasonable.
5: Easy Endorsement: Due to lower risk, endorsement rates are much higher than for unsecured cards.
These highlights make FD-backed cards an adaptable, low-risk way to build credit.
To fully understand what FD is in a credit card, it’s essential to know why it is beneficial.
1: Easy Endorsement: Indeed, if you have no credit history or pay records, you can get a credit card effectively by swearing an FD.
2: Low Chance for Banks: The FD secures the bank’s advance, thereby diminishing their exposure.
3: Upgrade Alternative: After steady execution, you can ask for a transformation to an unsecured card.
4: No Requirement for Compensation Slip: It’s perfect for students, homemakers, specialists, or self-employed individuals without fixed-income proof.
5: Rewards and Benefits: Indeed with an FD-backed credit card, you can appreciate cashback, rebates, and compensate for your purchases.
6: Financial Learning: It’s an incredible way to get it and oversee credit mindfully, making a difference you construct great propensities without taking on as well much hazard.
Also Read: Foreign Transaction Fees on Indian Credit Cards
Generally speaking, to be eligible for an FD-backed credit card, you need to meet these requirements:
1: You must reside in India and be at least eighteen years old.
2: You must either have a fixed deposit with the issuing bank or be willing to open one.
3: Least FD Sum: Your settled store ought to meet the bank’s least necessity, as a rule beginning from ₹10,000 or ₹20,000.
4: FD Residency: The store ought to remain in put for at least 6–12 months (or longer) to coordinate or surpass the credit card utilization period.
5: KYC Requirements
6: Ownership
Since the FD is the bank's primary security, eligibility is generally simple.
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If you’re prepared to get an FD-backed credit card, here’s a straightforward breakdown of the process:
1: Choose a Bank: Choose a bank that offers FD-backed or secured credit cards.
2: Set Up or Utilize an FD: Open an unused settled store or utilize an existing one that meets the bank’s requirements.
3: Apply for the Card: Yield your application online or at the department, counting your FD details.
4: KYC Confirmation
5: FD as Security
6: Card Issuance
7: Start Utilizing the Card
8: Monthly Installments
9: FD Discharge / Update: After reliable, dependable utilization, you can ask the bank to discharge your FD or update to an unsecured card.
1: Even though it’s a vow, your FD still wins full interest.
2: If you come up short to pay the levy, the bank will withdraw the extraordinary from your FD.
3: If you are near the FD, the card will consequently be closed or blocked.
4: You can have the lien expelled after clearing the levy or when the card is upgraded.
5: Any interest earned on your FD is still accessible as per standard rules.
6: Always affirm all terms in composing before vowing your FD.
Understanding these nuts and bolts guarantees you know the fine print of what FD is in a credit card.
Also Read: Should You Use a Credit Card for High-Value Purchases?
Opt for an FD-backed credit card if:
1: You have investment funds in a Fixed deposit and need to access them safely.
2: You must raise your credit score because you are new to it.
3: You don't make enough money or have enough credit to qualify for a traditional card.
4: Prior to applying for larger loans, you would like to raise your CIBIL score.
In these circumstances, understanding what FD is in a credit card becomes essentially valuable.
1: Check whether the FD residency aligns with your financial goals.
2: Ensure the bank permits the discharge of FD after a certain period.
3: Compare yearly expenses and interest rates at banks.
4: Clarify the handle for closing or updating the card.
5: Confirm the credit limit you will receive on your FD.
6: Read all terms on lien, untimely withdrawal, and default recovery.
7: Choose a bank with great client benefits and straightforward policies.
8: Preparation makes a difference; you avoid future surprises.
Also Read: When to Convert Credit Card Payments into EMI?
1: Missing payment due dates — indeed, one delay can influence your credit score.
2: Using full credit Limit over and over — it appears destitute utilisation.
3: Withdrawing cash — it pulls in tall interest from day one.
4: Ignore explanation blunders—continuously confirm your bills.
5: Breaking the FD early may result in penalties and the cancellation of the card.
6: Not following your CIBIL score — you may miss advanced signs.
7: Taking numerous FD-backed cards unnecessarily.
Avoiding these Mistakes guarantees your FD-backed credit card becomes a tool for financial development, not trouble.
Also Read: Online Shopping with Credit Cards – Safety Tips
It implies a credit card issued against a Fixed deposit. Your FD acts as collateral, and the bank gives you a credit Limit based on it.
Ordinarily, 70% to 90% of your FD sum is advertised as your credit limit.
Yes, indeed, even though it’s lien-marked, your FD continues to earn the same interest.
No, you cannot break or pull back the FD, whereas it is sworn against the credit card.
Yes. All cleared payments and consistent payments offer to move forward.
The bank will recover the outstanding amount by selling your FD.
Yes, after steady, on-time payments, a few banks may upgrade you to an unsecured credit card.
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