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What Is a Credit Card Against Fixed Deposit?
Posted on Monday, April 22nd, 2024 | By IndusInd Bank
We all long for the convenience of a credit card, but what if someone doesn’t match the eligibility criteria? Well, you can apply for a credit card against FD. You can think of it as a credit card that’s backed up by money you’ve already put aside in an FD. In this guide, we will take you through various aspects of availing a credit card on FD.
How Does a Fixed Deposit Credit Card Work?
In India, many banks now offer FD-based credit cards. This option allows you to avail of a credit card by pledging your FDs as collateral, providing a viable alternative known as a secured credit card. Unlike traditional credit cards, distinct eligibility criteria and usage parameters govern these secured cards.
To get the best credit card against FD, you need to deposit a specified amount of money into a Fixed Deposit account with a preferred bank. The deposited amount will then serve as collateral, mitigating the risk for the credit card issuer despite your potentially low credit score or limited credit history.
These cards function similarly to commonly used credit cards and provide you with a predetermined credit limit that you can utilise for various transactions/purchases.
Eligibility Criteria to Get an FD-Based Credit Card
To obtain a credit card against FD online, you need to fulfil the following eligibility criteria:
- You should be a resident Indian citizen with a valid residential address in India.
- You must fall within the age bracket specified by the card issuer, typically ranging from 18 to 65 years. However, different credit card companies may have variations in age limits, which is why you should check with your card issuer beforehand.
- To apply for this credit card, you must have an existing Fixed Deposit account with the bank offering the card or be willing to open one.
- The minimum FD amount required to avail of these cards varies across banks but typically ranges from ₹75,000 to ₹1,00,000 or higher.
What Will Be the Credit Limit of FD-Based Credit Cards?
In general, your monthly income and credit repayment behaviour determine the credit limit. However, for a credit card on FD, the limit is set by the issuing bank, considering the amount held in the FD account serving as collateral.
Typically, banks offer a maximum monthly credit limit ranging from 70% to 90% of the FD amount pledged. For example, if you pledge an FD of ₹100,000, you may be eligible for a credit limit of ₹70,000 to ₹90,000, depending on the bank’s policies. Similarly, if you pledge a larger FD, say ₹200,000, you could potentially receive a credit limit of ₹140,000 to ₹180,000.
This also means you can expect a correspondingly higher credit limit on your FD-based credit card if you deposit a higher amount in your FD.
Recommended Read: How Do You Choose the Right IndusInd Credit Card?
How to Apply for a Fixed Deposit Credit Card Online?
The process of obtaining a credit card against a fixed deposit involves the following steps:
1. Initiate a Fixed Deposit
If you don’t already have an FD with the bank, you’ll need to open one either online or by visiting a branch. Ensure that the amount you deposit aligns with the credit limit you desire for your credit card.
2. Complete the Credit Card Application
Once you have created the FD account, apply for a credit card online against the FD. The bank will provide an application form in which you need to fill in your details.
3. Provide Necessary Documents
Submit documents for identity verification and address proof, along with your FD account details for Know Your Customer (KYC) compliance.
4. Approval and Card Issuance
The bank will verify the submitted documents and issue a credit card against FD upon approval.
Want to apply for a credit card online against FD without any physical documentation? Apply one with IndusInd Bank today.
Disclaimer: 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. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
