How A Fixed Deposit Can Help You Secure A Credit Card Easily

In India, many banks and financial institutions prefer extending credit cards only to customers with a proven track record of timely repayments and a good credit score. This creates a barrier for those with little or no credit history. According to experts, a fixed deposit credit card , also known as a secured credit card , is one option that allows first-time applicants to step into the world of credit. Backed by your own savings, it provides access to credit facilities while continuing to earn interest on your fixed deposit.

What Is A Fixed Deposit Credit Card

A fixed deposit credit card is a type of secured credit card issued against a fixed deposit held with the bank. The FD serves as collateral, reducing the lender’s risk. The credit limit is generally a percentage of the FD value and is determined by the issuing bank or non-banking financial company. This arrangement makes it easier for individuals with limited or poor credit history to obtain a card and start building a positive credit profile.

Why Consider A Fixed Deposit Credit Card

For individuals who face rejection for traditional credit cards, an FD-backed card can be a stepping stone. Experts highlight some of the advantages:

• Ideal For Beginners: Even with no prior record of borrowing or repayment, applicants can qualify for this type of card.
  
  
  
• Improves Credit Score: Responsible usage and timely payments reflect positively in credit reports, gradually raising your score.

Earn While You Borrow: Unlike cards backed by cash deposits, your fixed deposit continues to accrue interest, offering dual benefits.

Steps To Apply For A Fixed Deposit Credit Card

Applying for a credit card against a fixed deposit is straightforward, but certain steps must be followed:

Open A Fixed Deposit

The process begins by opening a fixed deposit with a bank that offers FD-linked credit cards. Some banks may have a minimum deposit requirement, usually starting from a few thousand rupees.

Submit The Credit Card Application

Applications can typically be completed online through the bank’s portal or mobile banking app, or by visiting the branch. The bank will then assess your FD details before approving the request.

Marking A Lien On FD

Once the card is sanctioned, the bank places a lien on your fixed deposit. This means the amount is locked as security, and withdrawal will not be allowed until the credit card account is closed or dues are cleared.

Receiving The Card

After approval, the credit card is usually dispatched within 7–14 working days. It can either be collected directly from the branch or delivered to the applicant’s address.

Key Factors To Keep In Mind

Before applying for a fixed deposit credit card, financial experts advise considering these important aspects:

• Credit Limit: The credit limit will not exceed the FD value and may be restricted to a percentage of it, usually 75–90%.
  
  
  
• Interest Rates And Charges: While FD-backed cards are easier to obtain, interest on outstanding balances can be as high as regular cards if bills are not paid in full.

Early Closure Of FD: Breaking the FD before the end of its tenure could result in losing both the credit card and the associated benefits.

Comparison Of Offers: Different banks may have varying terms, annual fees and rewards programmes. Comparing multiple products ensures better value.

Why Experts Recommend This Route

According to financial planners, an FD credit card offers a disciplined way to begin credit usage without the risk of overspending. It provides a controlled environment where the applicant builds financial credibility, all while keeping savings intact in the form of a fixed deposit. Over time, once the borrower’s credit history strengthens, they can apply for standard unsecured credit cards with higher limits and broader features.

A fixed deposit credit card can be a practical solution for individuals who want to start building a credit history or have previously faced rejections for standard credit cards. It offers dual benefits of earning interest on savings while accessing credit, provided bills are paid on time. Before opting for such a card, it is advisable to compare different issuers and read the fine print carefully to avoid unexpected charges.

Disclaimer: This article is for informational purposes only. Readers are advised to consult certified financial advisors or banking professionals before making any financial decision.