FD-backed credit cards are gaining popularity in India. These cards are issued against a fixed deposit (FD) and considered a simple way to build or improve credit scores without a traditional credit history.
In such cases, the FD acts as a collateral, while still earning interest. They are ideal for individuals who do not meet regular credit card eligibility due to low credit scores. This is because credit card eligibility is determined by factors such as income, age, past history, etc.
So, students and early professionals tend to turn towards FD-backed credit cards for their financial needs. Even in this case, banks set criteria like minimum FD amounts and age limits.
Are FD‑Backed Credit Cards Worth It?
FD-backed credit cards can be a good option, especially for people with low credit scores or those who are just exploring this product. As these are issued against a FD, banks are more likely to issue them due to lower associated risks. However, the credit limit depends on factors such as the deposit amount.
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An FD-backed credit card typically offers a limit of up to 90% of the fixed deposit amount. It works like a regular credit card and can be used for shopping or bill payments. Because the spending limit is linked to your own money, it helps control overspending and encourages disciplined use. At the same time, the FD continues to earn interest, helping you build a decent corpus.
However, there are some downsides to this practice as well. Firstly, your money remains locked in the FD. In such credit cards, rewards are usually lower than those of premium cards. Additionally, high interest rates apply to unpaid dues.
As a result, while these cards are considered ideal for starting one's credit-building journey, they may not be a reliable long-term option for experienced users.
Top Options:
Several banks offer FD-backed credit cards with different entry levels and features. Entry-level cards like IDFC FIRST EA₹N, SBM Credilio RuPay and Niyo Global allow users to start with FDs as low as Rs 5,000. Mid-range options offer better rewards, while premium cards like IDFC FIRST WOW! or Axis Bank Privilege Easy require higher deposits.
1. IDFC FIRST EA₹N is an entry-level FD-backed credit card with a minimum FD requirement of Rs 5,000. It charges a fee of Rs 499 after the first year. The card offers UPI cashback rewards, making it suitable for digital users.
2. SBM Credilio RuPay is a lifetime free FD-backed credit card offering 1% cashback. One needs a minimum of Rs 5,000 FD to get this card.
3. Kotak 811 DreamDifferent FD-backed credit card requires a minimum FD of Rs 10,000, is lifetime free, and offers higher rewards on online purchases.
4. The mid-range Axis Bank My Zone Easy FD-backed credit card requires a minimum FD of Rs 15,000, charges Rs 500 fees and offers basic rewards.
5. Axis Bank Privilege Easy FD-backed credit card requires a minimum FD of Rs 65,000, making it a top-end product in this segment. It charges a Rs 1,500 fee and offers 1% rewards.
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