Credit Cards Against FD: Build Credit & Enjoy Exclusive Rewards

Credit cards have become an indispensable part of modern financial transactions, offering convenience and flexibility. However, obtaining a traditional credit card can be challenging, especially if you have a low credit score, irregular income, or lack the necessary documentation. In such circumstances, a credit card against a Fixed Deposit (FD) can be a lifeline. In this blog, we will delve into the world of credit cards secured by FDs and discuss the best options available in India.

Understanding Credit Cards Against FD

A credit card against FD is a secured credit card that banks issue based on your Fixed Deposit account. You can apply for this card if you hold an FD account with the same bank or open a new one. Typically, the credit limit of this card ranges from 75% to 90% of your FD amount. The FD serves as collateral, providing the bank with security in case of default.

Benefits of Credit Cards Against FDs

• Easy Approval: One of the primary advantages of these cards is that they are relatively easy to get approved for. They do not require income proof, a high credit score, or an extensive list of documents.
• Credit Building: Managing this card responsibly can help you build or improve your credit score, as the bank reports your payment history to credit bureaus. It's an excellent option for those looking to establish or rebuild their credit-worthiness.
• Lower Costs: These cards often come with lower interest rates and fees compared to regular credit cards. The lower risk to the bank due to the collateral allows them to extend more favourable terms to the cardholder.
• Interest Earnings: While enjoying the benefits of a credit card, you continue to earn interest on your FD account, ensuring your money continues to work for you.
• Access to Features and Rewards: Just like regular credit cards, credit cards against FDs offer various features and rewards, such as cashback, discounts, lounge access, and more. You can enjoy these perks while keeping your finances secure.

Selecting the right credit card against FD

Before applying for a credit card against FD, carefully consider your financial needs and goals. Compare the various options available in the market, taking into account factors such as credit limit, interest rates, fees, and rewards. Ensure that the card aligns with your financial situation and goals.

To help you choose the best credit card against FD in India, we have compiled a list of some of the popular cards offered by different credit card issuers.

Best Credit Cards Against FD

1. IDFC FIRST WoW Credit Card

IDFC Bank WOW Credit Card is a premium offering designed to cater to individuals seeking a rewarding credit card experience with added flexibility. 

Benefits

• Rewards: Earn up to 5% cashback on all purchases.
• Welcome benefit: 5% cashback, up to ₹1,000, on the first EMI transaction completed within 90 days of card activation.
• Dining and health benefits: Up to 20% discount at over 1,500 restaurants and up to 15% discount on more than 3,000 Health & Wellness outlets.
• Fuel surcharge waiver: 1% fuel surcharge waiver at all fuel stations in India, with a maximum monthly benefit of ₹200.
• Zero forex markup fee: No charges on international transactions.
• Insurance benefits: Personal accident cover (₹2,00,000), card liability cover (₹25,000), credit shield cover (₹25,000), and purchase protection cover (₹25,000).

Fee structure

• Joining Fee: ₹0
• Annual Fee: ₹0
• Annual Percentage Rate: 42%

Eligibility

Applicants should be at least 18 years old, Indian residents with a permanent address in an approved city, and hold a fixed deposit account with a minimum deposit of ₹5,000.

2. SBI Unnati Credit Card

The SBI Unnati Credit Card, a secured offering from SBI Card, is a valuable financial companion.

Benefits

• Rewards program: Earn 1 reward point for every ₹100 spent.
• Milestone reward: Get ₹500 cashback for spending ₹50,000 or more within a year.
• No annual fee for the first 4 years: Save money on the annual fee for the first few years of card membership.
• Fuel surcharge waiver: Get a 1% waiver on fuel transactions between ₹500 and ₹3,000, with a maximum waiver of ₹100 per statement cycle.

Fee structure

• Joining Fee: ₹0
• Annual Fee: ₹500
• Annual Percentage Rate: 42%

Eligibility

This card is extended to customers with a fixed-term deposit of ₹25,000 or more held with the State Bank of India. 

3. IDBI Bank Imperium Platinum Credit Card

With IDBI Bank Imperium Platinum Credit Card, you can enjoy the benefits of a secured credit card with a high credit limit, reward points, and exclusive offers.

Benefits

• Sign-up bonus: Get 500 Delight Points on every ₹1,500 spent within the first 30 days of card issuance and an additional 300 Delight Points on transactions between days 31 to 90 post-issuance.
• Rewards program: Earn 2 Delight Points for every ₹150 spent on shopping, travelling, and movies.
• Reward redemption: 1 reward point equals ₹0.25 and can be redeemed on the IDBI Delight reward portal or at Max Get More merchant outlets.
• Fuel surcharge waiver: Get a 1% waiver on fuel transactions between ₹400 and ₹4,000, with a maximum waiver of ₹300 per month.
• Zero lost card liability: Be protected from fraudulent charges in case your card is lost or stolen.

Fee structure

• Joining Fee: ₹499
• Annual Fee: ₹499
• Annual Percentage Rate: 40.92%

Eligibility

To be eligible for this card, applicants need to be 18 years or above and maintain a fixed deposit of ₹20,000 or more with IDBI Bank, making it an accessible and rewarding choice for financial enthusiasts.

4. SBI Student Plus Advantage Credit Card

The SBI Student Plus Advantage Credit Card is a tailored financial solution meticulously designed to meet the specific needs of students. This unique SBI Credit Card offers an array of benefits, including the opportunity to earn rewards with every card purchase. 

Benefits

• Balance transfer option: Transfer your outstanding balance from another credit card and pay it off at a lower interest rate.
• Spend-based benefits: Annual fee is waived on spending ₹35,000 in a year.
• 2.5% value back: Save on your utility bills by getting a 2.5% cashback on eligible purchases.
• Fuel surcharge waiver: Save on fuel costs by getting a 2.5% waiver on fuel transactions between ₹500 and ₹3,000. 
• Reward points: Earn 1 reward point for every ₹100 spent on all other transactions and redeem them for exciting gifts and vouchers.

Fee structure

• Joining Fee: ₹0
• Annual Fee: ₹0
• Annual Percentage Rate: 30.60%

Eligibility - Who can apply for a credit card against a Fixed Deposit?

Here are the eligibility criteria for applying for a credit card against a fixed deposit:

Who Can Apply:

• Resident Indian Individuals: You must be a resident of India.
• Non-Resident Indians (NRIs): Some banks may allow NRIs to apply if they have a valid Indian address.
• Age: You should be within the age limit specified by the bank, typically between 18 and 65 years.

Fixed Deposit Requirements:

• Minimum Amount: You need to have a minimum FD amount, which varies from bank to bank. It's usually between Rs. 10,000 to Rs. 25,000 or higher for higher credit limits.
• Tenure: The FD should have a minimum tenure, often six months or more.
• Type of FD: Tax-saving FDs and FDs with existing liens are generally not eligible.

Important Note:

• Lien on FD: When you apply for a credit card against your FD, the bank will mark a lien on the FD. This means the FD amount will serve as collateral for the credit card.
• Credit Limit: The credit limit you receive is usually 75% to 85% of the FD amount.
• Interest on FD: The FD continues to earn interest even with the lien.

Additional Tips:

• Check with Your Bank: Contact your bank directly to inquire about their specific eligibility criteria and the process for applying for a credit card against your FD.
• Compare Offers: Different banks offer different terms and conditions, so compare offers to find the best deal for you.
• Maintain Good Credit History: While a credit card against FD doesn't require a good credit score, maintaining a good credit history can help you get better terms and offers in the future.

By meeting the eligibility criteria and following the application process, you can easily obtain a credit card against your fixed deposit and enjoy the benefits it offers.

Who should apply for a credit card against a fixed deposit?

People who should consider applying for a credit card against a fixed deposit are:

Those with limited or no credit history:

• Individuals new to credit: If you've never had a credit card before, a credit card against FD can help you establish a credit history.  
• People with a poor credit score: If you have a low credit score due to past financial difficulties, a credit card against FD can help you rebuild your creditworthiness. 

Those who want a secured credit card:

• People seeking financial stability: A credit card against FD is a secured credit card, meaning your FD acts as collateral. This can provide peace of mind to lenders and can help you get approved for a credit card even with a less-than-perfect credit history.  

Those who need a credit card for specific purposes:

• Travel enthusiasts: A credit card against FD can be useful for booking flights, hotels, and other travel expenses.  
• Online shoppers: You can use it for online purchases and enjoy rewards and benefits.
• Emergency funds: They can serve as a backup financial resource in case of unexpected expenses.  

Important Considerations:

• Lower credit limit: The credit limit on a credit card against FD is typically lower than regular credit cards, as it's tied to your FD amount.  
• Lien on FD: Your FD will be held as collateral, which means you won't have access to the full amount until you repay the credit card balance.  
• Interest on FD: You'll continue to earn interest on your FD, but it's important to manage your credit card usage responsibly to avoid defaulting on payments.  

By understanding the benefits and drawbacks, you can decide if a credit card against FD is the right choice for your financial needs.

Conclusion

In conclusion, credit cards against FD are a great option for those who want to improve their credit score, earn rewards, and enjoy interest-free credit. These cards offer a range of benefits, including low joining and annual fees, high reward rates, and flexible credit limits. However, with so many options available, it can be challenging to choose the right one. That's why we recommend using Finology Select, a platform that allows you to compare over 50 credit cards and find the one that best suits your needs.
So, what are you waiting for? Compare credit cards at Finology Select and make the right choice today!

Frequently Asked Questions

1. What is a credit card against FD?

A credit card against FD, also known as an FD card or secured credit card, is a credit card issued against a fixed deposit (FD) held with the bank. The FD acts as collateral, meaning the bank can seize the deposit to recover any outstanding balance if you fail to make your credit card payments.

2. How much credit limit can I get with a credit card against FD?

Banks typically offer a credit limit of 75% to 90% of your FD amount. For example, if your FD is for ₹100,000, your credit limit could be around ₹75,000 to ₹90,000.

3. What are the benefits of a credit card against FD?

1. Easier to obtain: Even with no credit history or a low credit score, you can qualify for a credit card against FD because the FD secures the credit line.
2. Build credit score: You can build a good credit history by using your credit card responsibly and paying your bills on time.
3. Enjoy credit card benefits: You can avail of various benefits offered by credit cards, such as reward points, cashback offers, airport lounge access, etc. (depending on the specific card)
4. FD keeps earning interest: Even though the FD is linked to the credit card, it continues to earn interest throughout the FD term.

4. Are there any disadvantages to a credit card against FD?

1. Lower credit limit: Compared to regular credit cards, credit cards against FDs typically come with a lower credit limit.
2. Reduced liquidity: The FD linked to the credit card is marked as collateral and cannot be accessed easily until the credit card dues are settled or the card is closed.

5. Who should consider a credit card against FD?

1. Individuals with no credit history or a low credit score.
2. People who want to build their credit score.
3. Those who need a credit card but cannot access a regular credit card due to income limitations.