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How to Get a Credit Card Against Fixed Deposit

Niyati , Last updated: 10 June 2024  
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If you want a credit card but don't have a decent credit score, look into an FD credit card option. It is a secured credit card you borrow against a fixed deposit you hold with a financial organisation. FD-backed credit cards have become extremely popular over the last few years due to their easy access and low-interest rates. Usually, the credit limit with such a card can be as much as 75-85% of the FD amount. Moreover, the fixed deposit continues earning the desirable interest as planned. The following sections will discuss how to apply for a credit card against a fixed deposit.

What is a Credit Card Against a Fixed Deposit?

A credit card against a fixed deposit is a secured credit card that FD holders may borrow against their fixed deposit. Each financial institution specifies a minimum FD amount to apply for an FD credit card. For instance, Kotak811 specifies the minimum FD amount of Rs. 5,000 to take a credit card against it. The higher the FD amount, the bigger the credit limit. They provide up to 90% of the FD amount as the credit limit.

How Does an FD Credit Card Work?

When you open a fixed deposit and seek a credit card against it, the bank does not demand proof of income or a minimum credit score. The fixed deposit serves as security against the card. If you default, the credit card company has the legal right to break the FD and recoup its money. However, before this extreme action, the bank intimates through various communication channels.

How to Get a Credit Card Against Fixed Deposit

Features of an FD Credit Card

Let's look into the features of an FD credit card:

  • Low Minimum FD Amount: The minimum FD amount required for a credit card can be as low as Rs. 5,000. Hence, it is affordable.
  • Ample Credit Limit: The credit limit on an FD card typically depends on the FD amount. While many banks offer 75-85% of the FD amount as the credit limit, Kotak811 offers an ample credit limit of up to 90%.
  • No Documentation: You don't need to provide proof of income to apply for an FD credit card.
  • Short Tenure: The minimum FD tenure you secure is six months.
  • Interest-Free Period: You can enjoy shopping without interest during the interest-free period of 48 to 55 days with FD credit cards.
  • Rewards: FD credit cards offer several rewards, such as cashback and reward points, to customers making payments with the credit card.
  • Interest on FD: FD holders continue earning interest on their fixed deposits even after taking a credit card against them.

Benefits of Getting an FD Credit Card

Let's look at the benefits of getting an FD credit card:

  • Helps get a credit card even with a low income or credit score
  • High credit limit of up to 90% of the FD amount
  • FD remains safe and continues earning interest during the tenure.
  • Timely payments help build the credit score over time.
  • A minimum FD of Rs 5,000 is required to apply for a credit card.

Eligibility to Apply for an FD Credit Card

In India, only Indian residents are eligible to apply for credit cards against fixed deposits. Applicants below 18 years of age are not eligible. Foreign nationals, HUFs, third-party firms, trusts, societies, partnership firms, tax-saver FD customers, and NRIs cannot apply for an FD credit card. Additionally, FDs already collateral against a loan or overdraft are not eligible for credit cards.

 

Applying for a credit card against a fixed deposit can be ideal for the following:

  • Individuals with poor income or irregular income sources
  • People with low credit scores or poor credit history
  • Individuals with no income proof

Must Read: How to Transfer Money from Kotak Credit Card to Bank Account

 

Steps to Apply for a Credit Card Against FD

Application Process for Non-FD Holders: An individual seeking an FD credit card must have a fixed deposit with the respective financial institution. Therefore, if you don't have an FD, you must follow the procedure to open one first. Once your FD is active, you can contact your nearest branch to apply for a credit card against it. You can also apply for one through the bank's website or app.

Application Process for FD Holders: If you already have a fixed deposit with the respective financial institution, you can visit their website and apply for a credit card against it. Click the 'Get a Credit Card' button and fill out the necessary application details.

The perks and application process for an FD credit card are straightforward. Moreover, the efficiency of these cards makes them highly demanded products due to their impressive features and benefits.

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Published by

Niyati
(Student)
Category Miscellaneous   Report

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