In India, credit cards have become an essential financial tool; however, not everyone qualifies due to income requirements or a limited credit history. To bridge this gap, banks now offer FD-backed credit cards, a unique product that links your fixed deposit (FD) with a credit card facility. The question is: do these cards really provide a low-risk, high-reward option?
An FD-backed credit card is issued against a fixed deposit placed with the bank. Unlike standard credit cards, where eligibility depends on income and credit score, these cards use the FD as collateral.
Credit Limit: Usually 75–90% of the FD value
Security: The FD acts as a safeguard, reducing the bank’s risk
Availability: Offered by most major banks like SBI, HDFC, ICICI, and Axis
No need for a high credit score or income proof. Perfect for students, first-time users, or those with thin/no credit history.
Timely repayments improve your CIBIL score, opening the door to unsecured credit cards and loans later.
Since the FD secures the card, banks are less exposed to risk. Customers enjoy card benefits like cashback, rewards, and EMI options.
Even while being used as collateral, the FD earns interest, adding a passive return.
The card can be a quick liquidity option without breaking the FD.
FD Lien
The FD remains locked as long as the card is active. Default on dues, and the bank can liquidate the FD.
Lower Rewards vs Premium Cards
FD-backed cards often come with basic features. Those seeking premium perks may find them limited.
Overconfidence in Spending
Since approval is easy, overspending can hurt credit health if repayments are delayed.
Opportunity Cost
The FD funds are tied up, meaning you can’t use them for other high-return investments.
First-time card users looking to build a strong credit history
Young professionals & students without sufficient income proof
People with low or no CIBIL score want an entry into the credit ecosystem
Individuals with surplus funds who prefer safe instruments like FDs
Yes, FD-backed credit cards are indeed a low-risk, high-reward option for many, especially beginners. The FD collateral reduces default risk for banks, while customers get the dual benefit of credit card usage and interest income on the FD. However, the “high reward” is relative. These cards won’t offer luxury perks, but they unlock long-term rewards in creditworthiness, which can be far more valuable. Used responsibly, FD-backed credit cards can be the perfect stepping stone toward financial independence.