Imagine you’re ready to buy your dream car or home, but the cost is just beyond your reach. One solution? Easy Monthly Instalments (EMIs). But what if you don’t yet have a credit score to qualify for EMI-based purchases?
That’s where FD-backed credit cards can help. These cards are designed to help you build a credit history by offering credit against a Fixed Deposit (FD), making them an ideal starting point for new-to-credit individuals.
What Is an FD-Backed Credit Card?
An FD-backed credit card is issued against a Fixed Deposit, which acts as collateral. Since the bank’s risk is reduced due to the secured nature of the card, you don’t need an existing credit score or income proof to apply.
The credit limit is typically a portion of your FD amount, and your deposit continues to earn interest while it’s held as security. This makes FD-backed cards a convenient option for building credit while also earning returns.
How It Helps Build Credit
Banks share your credit usage and repayment behaviour with credit bureaus. When you use your card wisely and pay on time, it helps establish a positive credit history—proving that you can manage credit responsibly.
Credit Reporting
One of the biggest benefits of FD credit cards is that your payment activity is reported to credit bureaus such as CIBIL and Experian. These reports include your repayment patterns and credit usage, which are key components of your overall credit profile. Over time, consistent positive behaviour improves your creditworthiness.
Payment Discipline
Paying your credit card dues on time has a strong impact on your credit score. Building the habit of timely payments is essential for long-term financial health and creditworthiness.
Managing Credit Use
It’s recommended to use only a part of your available credit limit. Responsible usage shows lenders that you’re not over-reliant on credit, which contributes positively to your score.
Other key aspects that influence your credit profile include:
- Credit history length – Older accounts can strengthen your profile.
- Credit mix – Having a combination of credit types (like loans and credit cards) can be beneficial.
- New credit applications – Applying for multiple credit products in a short span can negativelyaffect your score.
Who Can Apply?
FD-backed credit cards are available to most individuals who have a Fixed Deposit with the issuing bank. Generally, you need to:
- Be a resident Indian adult.
- Hold an FD in your name (single ownership).
- Submit basic KYC documents like PAN and Aadhaar.
- Have a mobile number linked to your Aadhaar.
The minimum FD requirement is modest and varies slightly by bank. These easy eligibility conditions make it simple for first-time users to access the benefits of a credit card.
Final Thoughts
FD-backed credit cards are a smart and low-risk way to start building your credit score. They also come with perks like reward points or discounts on purchases, depending on the bank. With minimal setup requirements and the added advantage of earning on your FD, these cards offer a balanced mix of security, rewards, and credit-building potential.
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