Best Credit Cards Against Fixed Deposit
Last Updated : March 30, 2024, 1:01 p.m.
A credit card is generally an unsecured debt that allows users to buy their favourite stuff online or offline on credit. Apart from that, a credit cardholder gets about 20-50 days of the interest-free credit period. However, due to the lack of a good credit score, an unsecured credit card can be denied to you. And so, you need to submit collateral such as a fixed deposit to get a credit card. These cards are credit cards against a fixed deposit and come with a lower interest rate than unsecured cards. You can easily apply for a fixed deposit-backed credit card online or at the bank. If you are seeking a list of the best credit cards against FD to choose from, you can check all that below.
5 Best Credit Cards April 2024
| Credit Card | Minimum FD | Credit Limit (% of the FD) | Joining Fee | Annual Fee |
|---|---|---|---|---|
| OneCard Credit Card | ₹5,000 | 100% | N/A | N/A |
| SBI Card Unnati | ₹25,000 | N/A | N/A | ₹499 (5th year onwards |
| ICICI Bank Coral Credit Card | ₹50,000 | 90% | ₹500 | ₹500 |
| Axis Bank Insta Easy Credit Card | ₹20,000 | N/A | N/A | N/A |
| Kotak 811 #DreamDifferent Credit Card | ₹5,555 | ₹9,000 to ₹16,00,000 | N/A | N/A |
How an FD-Backed Credit Card Works?
An FD-backed credit card functions differently from a regular credit card. These differences are in terms of how you qualify and how the bank secures the line of credit. Here’s the breakdown:
- Security Deposit: Instead of relying on your credit history, an FD-backed card uses your fixed deposit (FD). The bank essentially holds your FD as collateral.
- Credit Limit: The credit limit you receive is typically a percentage (often 75-85%) of the FD amount. So, a higher FD translates to a larger credit limit. However, some of the best FD cards can offer you 100% FD as your credit limit.
- FD Interest: The good news is you continue to earn interest on your FD even while you’re using a card.
- Repayment: Use FD cards like a regular credit card, making purchases and paying your monthly bills. If you fail to make payments, the bank may seize your FD to recover the outstanding amount.
Benefits of FD-Backed Credit Cards
Having a good credit history is essential for many financial goals, such as getting approved for a loan. One way to build a positive credit history is by using an FD-backed card responsibly and making timely payments. Such responsible use shows lenders that you are capable of handling credit and can be relied upon to make payments on time. Furthermore, FD-backed cards can be easier to get approved for, even with a limited credit history, because the FD acts as security for the lender. This means that if you default on payments, the lender can recover their money through the FD. By using an FD-backed card responsibly, you not only build your credit history but also increase your chances of getting approved for other credit products in the future.
Things to Consider
To apply, you’ll need to meet the bank’s age requirement and have a fixed deposit with them for a specified minimum amount.
However, there are limitations on the type of FD you can use:
It cannot be linked to Quantum deposits, tax-saving 80C plans, Non-Resident External (NRE) or Ordinary (NRO) accounts, Housing Finance Company (HFC) deposits, or held in the name of third parties, partnership firms, Hindu Undivided Family (HUF), societies, trusts, companies, or under an existing lien.
