What is a Credit Card against Fixed Deposit?

Not everyone qualifies for traditional Credit Cards, particularly those with limited credit history or low credit scores. To help these individuals, banks and financial institutions in India offer Credit Cards against FDs. This option enables you to secure a Credit Card by pledging your FDs as collateral. Often referred to as secured Credit Cards, they have distinct eligibility criteria and usage guidelines compared to conventional Credit Cards.

A Credit Card against a Fixed Deposit is a distinctive product offered by banks and financial institutions in India. This option allows you to obtain a Credit Card by depositing a specific amount into a Fixed Deposit account. The deposited amount serves as collateral, which mitigates the issuer's risk and enables you to access a Credit Card even with a low credit score or no credit history. These cards operate similarly to regular Credit Cards, offering a predefined credit limit for various transactions and purchases.

To obtain a Credit Card against a Fixed Deposit, you need to meet the following criteria:

• Citizenship and Residence
  You must be a resident Indian citizen or a Non-Resident Indian (NRI) with a valid residential address in India.

• Age
  You should fall within the age range specified by the card issuer, usually between 18 to 65 years. Be sure to verify the specific age requirements with your card issuer, as these can vary among different companies.

• Fixed Deposit Account
  You must either have an existing Fixed Deposit account or be willing to open one with the bank that offers the Credit Card. The amount deposited in this FD will be collateral for your Credit Card.

• Minimum FD Amount
  The minimum Fixed Deposit amount required to secure a Credit Card varies by bank. Typically, this minimum can range from ₹10,000 to ₹25,000, or even higher for Credit Cards with larger limits. Always check the bank's specific policies to understand their requirements and features.

In the case of traditional Credit Cards, the card issuer sets the credit limit based on your monthly income and credit repayment behaviour. However, for FD Credit Cards, the card issuing bank sets the credit limit after assessing the FD amount held as collateral. Most banks provide a maximum monthly credit limit of 75% to 85% of the FD amount. So, if you pledge an FD of a higher amount, you stand to get a higher credit limit at your disposal

The process of availing Credit Cards against Fixed Deposit is relatively straightforward and involves the following steps.

• Create A Fixed Deposit: If you do not have an existing Fixed Deposit with the bank, you need to first open an FD account. You can open the FD online or by visiting the bank. Ensure you consider the credit limit you want and create an FD accordingly.
• Fill Out Your Credit Card Application: After creating the FD, you can approach the bank and express your interest in obtaining a Credit Card against FD. The bank will provide an application form that you must fill out and provide your necessary personal and Fixed Deposit details.
• Submit The Required Documents: You must provide your identity and address proof documents (for KYC purposes) and the Fixed Deposit certificate to complete the documentation process for a Credit Card against FD.
• Approval and Issuance: Once you submit your documents, the bank verifies them. After evaluating your application, the bank approves your request for a Credit Card and issues it. The bank sends the CC and other vital literature about the card usage, policies, etc., to your registered address.

A key benefit of a Credit Card against Fixed Deposit is that your FD continues to earn interest while it is pledged as collateral with the bank throughout the card’s tenure. The interest rate on your FD depends on the bank’s prevailing rates and the chosen FD term.

If you fail to repay your Credit Card dues, the issuer will deduct the outstanding amount from your pledged FD. Any unpaid interest on the outstanding dues will also be recovered from the FD if you do not make timely payments.

Following are the benefits of getting a Credit Card against Fixed Deposits:

• Easy Approval: FD-based Credit Cards are an excellent option for individuals with limited or no credit history, making it easy to get approval.
• Building Credit Score: Timely repayment of Credit Card bills helps build a positive credit history and improves your credit score over time.
• Fixed Deposit Continuity: Your FD serves as an investment generating returns. Interest payments on FDs are not stopped while the FD is pledged as collateral with the Credit Card issuing bank.
• Lower Fees: Credit Card issuers usually levy lower joining fees and annual fees on FD based Credit Cards as compared to regular Credit Cards.

HDFC Bank’s Credit Card against FD is an excellent product that enables you to continue earning interest on your FD while enjoying the benefits of a Credit Card. We do not ask for your income or employment information when you apply for this Credit Card. With our FD-based Credit Cards, you can start building your credit history and open the doors of eligibility for credit-based products like loans in future.

Visit HDFC Bank to apply for a Credit Card against FD today.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals are subject to documentation and verification as per the bank’s requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.