Santa Claus comes around just once a year. In the meantime, there are Credit Cards.

Credit Cards against Fixed Deposits

Credit cards against fixed deposit, technically termed as Secured Credit Cards, are an ideal option to those who have a no credit history or poor/no CIBIL score.

While getting a regular credit card requires you to have a stable monthly income, good credit score and others, for a secured credit card, you simply need a minimum fixed deposit with the bank.

Let’s check other details about availing credit cards against fixed deposit, their merits, demerits, how to apply and other information in detail.

 

What is Credit Card Against Fixed Deposit?

 

A secured credit card is a credit card variant that can be availed against a fixed deposit (FD) with the bank or card issuer.

Each bank specifies a minimum fixed deposit amount to apply for a secured credit card. The amount in your FD account is directly linked to the total credit limit on your credit card. This means, the higher your FD amount is,the higher would be your credit card limit. Banks typically provide 75% to 85% of the FD amount as the credit card limit.

   

How Does a Secured Credit Card Work?

 

When you open an FD with the bank and apply for a credit card against it, you don’t have to submit any other income proof to avail the credit card.

The FD serves as the security deposit against the credit card. In case of default on the credit card payment, the bank or the credit card issuer reserves all the rights to break your deposit.

However, before initiating such an action, the bank would intimate you through all possible communication channels.

On the other hand, a secured credit card in good standing for a stipulated amount of time, let’s say 1-2 years, would prompt the bank or the issuer to delink your FD.

Holding your credit card in good standing implies keeping it active, using it within the spend limits, repaying the dues on time every month and a consistent spending pattern.

 

Features of Credit Cards against Fixed Deposit

 
  • Affordable FD amount – The minimum fixed deposit amount usually ranges from Rs.10,000 to Rs.20,000 and is hence affordable.
  • Credit limit – Credit limit offered on secured credit cards typically depends on the fixed deposit amount. Generally, banks offer 75% to 85% of the deposit amount as total credit limit on the card.
  • Minimum documentation – To apply for secured credit cards, you do not need to submit a lot of documents.
  • Minimum tenure – The minimum tenure of the fixed deposit that you are giving as security to the bank should be 6 months.
  • Interest free period – Generally, banks offer an interest free period of 48 days to 55 days on secured credit cards.
  • Rewards – These cards offer multiple rewards such as reward points, cashback, etc., to the customers.
  • Interest on fixed deposit – Cardholders will continue earning interest on their fixed deposit.

List of Banks Offering Credit Cards Against Fixed Deposits

 

Some of the banks that offer credit card against fixed deposits in India are:

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

Compare the amount of Fixed Deposit required to apply for the secured credit cards or the credit cards against FD among the below top banks in the India in 2019.

Credit Card Variant Fixed Deposit Required Joining fee/Annual Fee
Axis Bank Insta Easy Credit Card Min. Rs.20,000 Joining fee: Rs.500; Annual fee: NIL
ICICI Bank Coral Credit Card Rs.20,000 Rs.500
ICICI Bank Instant Platinum Credit Card Rs.20,000 NIL
SBI Card Unnati Rs.25,000 First 4 years – NIL 5th year onwards – Rs.499
Kotak Mahindra Aqua Gold Credit Card Rs.25,000 NIL
Union Bank of India Usecure Credit Card Rs.25,000 NIL
YES Prosperity Rewards Plus Credit Card Rs.50,000 Rs.350
YES FIRST Preferred Credit Card Rs.3 lakh Rs.2,500
Bank of Baroda Assure Credit Card Not Available Rs.500
Andhra Bank Visa Classic Rs.10,000 Rs.400
Andhra Bank Visa Platinum Rs.10,000 Rs.400
DCB Payless Credit Card Not Available Rs.350
 

Eligibility to Apply for Credit Cards Against Fixed Deposit

 

The eligibility criteria to apply for a credit card varies for each secured credit card. A few factors, however, are common for all the cards including the age and minimum fixed deposit requirement.

As we have already discussed about the minimum deposit required, let’s check the age criteria for each card.

Credit Card Variant Age criteria
Axis Bank Insta Easy Credit Card Minimum 19 years
ICICI Bank Coral Credit Card Minimum 19 years
ICICI Bank Instant Platinum Credit Card Minimum 19 years
SBI Card Unnati Minimum 21 years
Kotak Mahindra Aqua Gold Credit Card 18 years to 75 years
Union Bank of India Usecure Credit Card As mentioned by the Bank
YES Prosperity Rewards Plus Credit Card 21 years to 60 years
YES FIRST Preferred Credit Card 21 years to 60 years
Bank of Baroda Assure Credit Card As mentioned by the Bank
Andhra Bank Visa Classic 21 years to 70 years
Andhra Bank Visa Platinum 21 years to 70 years
DCB Payless Credit Card As mentioned by the Bank
 

How to Apply for a Credit Card Against Fixed Deposit

 
  • For non-FD accountholders: If you wish to apply for a secured credit card, you need to have a fixed deposit account with the respective bank.
  • Hence, it’s imperative to visit the nearest bank branch to open your FD account first followed by the credit card account.

    While some credit cards are issued as complimentary for having an FD with the bank, others need to be applied for.

    Once you open your fixed deposit account with the bank, you can apply for the credit card at the same branch by filling up the application form for the same.

    You can also apply for the secured credit card online, once your FD account becomes active with the bank.

  • For FD accountholders: If you already have a fixed deposit account with the bank from which you would like to avail the secured credit card, you can simply apply online by visiting the bank’s website.
 

Documents Required to Apply for a Secured Credit Card

 
  • Once you have the fixed deposit account with the bank, you don’t have to submit any other documental evidence of your identity and place of residence.
  • The bank would consider the same proofs that you have submitted while opening the FD account. However, they might check the validity of the proofs, especially the current residence.
  • When you’re opening a new FD account with the bank, you might have to submit your identity and residence proof.
 

Benefits of having a credit card against fixed deposit

 

Having a secured credit card provides the following benefits –

  • No income proof required: Have a credit card without any income proof. This is helpful for students, home makers, freelance workers, etc.
  • Helps to build credit history: Having a credit history has become a norm to avail any credit-related products. Having a secured credit card and using it properly would allow you to build a good credit history.
  • Access to other credit lines: Once you have credit history and the associated credit score, you don’t find any problem in applying for other loan products including personal loan, home loan, auto loan, etc. Thus, secured cards introduce you to the world of credit.
 

FAQs Related to Credit Cards Against Fixed Deposit

 
When should I have a secured credit card?

You can avail a secured credit card when;

  • You don’t have credit history.
  • Have a poor or no credit score.
  • When you’re applying for a credit line for the first time.
  • When you don’t have any income proof.
  • When you wish to build your credit score.
  • When you already have a fixed deposit with the bank.
Credit Cards against Fixed Deposit are best for
  • People with low credit score or no credit history.
  • People who do not meet the income criteria.
  • People who have just started earning.
  • People who live in an area that the lender has blacklisted.
  • People who are employed by organizations that are blacklisted by the lender or have a bad reputation.
What are the disadvantages of secured credit cards?

You must have the minimum deposit to have a secured credit card and the money gets locked for the entire FD tenure. Failure to make payment would hurt your deposit as well as your credit score.

 

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