Credit Card Against Fixed Deposit

The main business of a bank is to accept deposits and lend money. Money can be lent to loan applicants/account holders through various products and schemes offered by banks. One of the innovative ways the bank has come up with is to issue credit cards against fixed deposits. In this case, fixed deposits act as a collateral security. Thus, credit cards issued are secured. Generally, credit cards issued are unsecured as these are issued on the basis of salary, past credit history, and many other factors. Secured credit cards are a boon to those who have no credit history or poor or no credit score. The important differentiation is that a regular unsecured credit card requires a borrower to have stable monthly income, good credit scores, and other eligibility conditions. On the other hand, a secured credit card simply needs a fixed deposit with the bank. With respect to secured credit card, the bank sets a credit limit as a percentage of the amount of fixed deposit with the issuing bank. After issuing such a card, a lien is marked on the fixed deposit till the credit card is returned to the bank. Lien is charged by banks on its fixed deposits when an advance is granted on them after keeping the Fixed Deposit as security.

Features of Credit Cards against Fixed Deposit

  • In order to apply for secured credit cards, the customer needs to have a minimum fixed deposit ranging from INR 10,000/- to INR 20,000/- and hence, it is affordable.
  • Generally, the credit limit offered is 75% to 85% of the deposit amount as the total credit limit on the card.
  • Minimum documentation is required to apply for credit cards against a fixed deposit.
  • The duration of fixed deposit against which credit card is applied shall be a minimum of six months.
  • Generally, an interest-free period of 48 days to 55 days on secured credit cards is offered by the bank.
  • Rewards such as cash back, reward points etc. are also offered by such credit cards.
  • Interest on fixed deposits shall be provided during the tenure of such credit card.

Benefits of Having a Credit Card Against Fixed Deposit

  • One does not need to provide any income proof as the credit card is issued on the basis of fixed deposits.
  • A secured credit card can be used to build a good credit history if used properly.
  • A good credit history shall help in obtaining other loans for various purposes, as required.

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How Does a Secured Credit Card Work?

Applying for a secured credit card from the bank with which the customer already has a fixed deposit does not require submission of any income proof to avail the credit card. The fixed deposit shall be used as a security against the credit card issued. In case of any default, the bank shall recover dues from the fixed deposit by liquidating it. Before such an action, the bank shall communicate through all possible means. If the secured credit card holder proves to have a good credit history, then he can request the bank to delink his fixed deposit.

List of Banks Offering Credit Cards Against Fixed Deposits

The list of some of the banks offering credit card against fixed deposits are:

  • ICICI Bank.
  • State Bank of India.
  • Axis Bank.
  • Kotak Mahindra Bank.
  • Central Bank of India.
  • Bank of Baroda.

Eligibility to Apply for Credit Cards against Fixed Deposit

Eligibility criteria to apply for a credit card varies from bank to bank issuing such credit cards. It depends upon the minimum fixed deposit to be held by the customer and the minimum age required to hold a credit card.

For Example:

  1. Kotak Mahindra Aqua Gold Credit Card:

Age criteria shall be 18 years to 75 years and fixed deposit required shall be INR 25,000/-

  1. Andhra Bank Visa Platinum:

Age criteria shall be 21 years to 70 years and fixed deposit required shall be INR 10,000/-

Documents Required for Credit Cards against Fixed Deposit

No document is required to be submitted once a fixed deposit is opened with the bank. All the documents submitted for opening fixed deposit shall be considered for the credit card as well. However, the bank has the power to check the validity of the proofs submitted.

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FAQs on Credit Cards against Fixed Deposit

Can I get a credit card against FD in Axis Bank?

Yes, credit card against FD in Axis Bank can be issued by the banking authority.

Can I get a credit card against FD in HDFC Bank?

Yes, credit card against FD in HDFC Bank can be issued by the banking authority.

Can I get a credit card against FD in ICICI Bank?

Yes, credit card against FD in ICICI can be issued by the banking authority.

Can I get a credit card against FD in SBI?

Yes, credit card against FD in SBI Bank can be issued by the banking authority.

Can I get a credit card with a fixed deposit?

Yes, most major banks in the country provide credit card against fixed deposit.

Can we get a credit card on a fixed deposit?

Yes, but depending on the terms and conditions/ eligiblity criteria and facility provided by the bank against fixed deposit schemes, credit cards can be issued to the holder of the fixed deposit. Every bank has their own terms and conditions/criteria for a credit against fixed deposit.

What is pledge FD?

Pledge FD means deposit given by the loan applicant (the pledger) to the bank (the pledgee) as a means of financial security for a loan. The bank has the legal right to take charge of the pledged security, if the loan amount is defaulted by the debtor and not paid as per the terms and conditions of the loan.

Which bank gives credit card against FD?

Banks such as ICICI, Kotak Mahindra, HDFC, SBI, Axis, etc. provide credit card against FD.

Which bank provides a credit card to students?

Banks such as Kotak Mahindra, Axis, ICICI, Bank of India issue credit cards to students.

Which banks provide secured credit cards?

The following banks provide secured credit cards in India: State Bank of India, ICICI Bank, Bank of Baroda, Axis Bank, Andhra Bank, Kotak Mahindra Bank, Union Bank of India, DCB Bank

Which credit card is best against FD?

Union Bank of India charges the lowest APR at 15.60% amongst banks offering credit card against FD. The minimum FD amount needs to be INR 25,000 for the customer to be eligible for a credit card in this particular bank. Other banks have their own criteria of minimum FD balance.

What are the disadvantages of secured credit cards?

Non- payment of any dues can lead to breaking of fixed deposits. Also, one needs to maintain a minimum amount of deposit to have a secured credit card.

Where the account holder does not have a FD?

It is important to hold a fixed deposit if a person needs to apply for a secured credit card. The customer shall first open a fixed deposit which shall then be followed by a credit card account. Post opening of FD, the application can be made online for the issue of credit card or one can also file in the form available at the branch.

Where account holder has an FD?

In this case, one can simply apply by visiting the bank’s website online.