When people think of credit cards, they often imagine them as something given only to those with a strong income history or an excellent credit score. But there is another option that blends the safety of savings with the flexibility of a credit card, and that is the FD based credit card.
For many individuals, this option is not just a practical route to access credit. It is also a way to enjoy the benefits of a credit card for a lifetime while steadily building or improving their credit profile. The beauty of this arrangement lies in the fact that your Fixed Deposit acts as the security, giving you access to a card with a limit linked to your deposit. This way, you continue earning interest on your FD while using the card for everyday expenses.
But the question most people have is, how much FD is actually enough to get a credit card with a good spending limit? Let us explore this in detail.
What is an FD based credit card
An FD based credit card is a secured credit card where your fixed deposit acts as a guarantee. The bank does not rely heavily on your income or past credit score, making it a great pick for those who have no credit history or wish to rebuild their CIBIL score. It also works well for people who want access to credit but prefer a safer way to manage it without overextending themselves financially.
The process is straightforward. You open a fixed deposit with the bank, and in return, the bank issues a credit card against it. The credit limit offered is generally a percentage of the FD value, and this percentage can vary from one bank to another.
How your FD amount decides your credit limit
The size of your fixed deposit directly impacts the credit limit you can get. If a bank provides some percentage of your FD amount as the limit, then the greater the investment is, the higher the limit you get. A larger FD can give you more spending flexibility, while a smaller one may suit someone who only wants the card for occasional expenses. What seems like a good cap to you depends all on how you spend and how your spending habits and lifestyle is.
Choosing the right FD amount for your needs
There is no single amount that will suit all. You can find the suitable FD amount by considering your usual monthly costs, how much extra you need for unexpected spends, and whether your spending might increase in the near future.
If you expect changes in your financial requirements, such as shifting to a new place or starting new commitments, it can be smart to go for an FD amount that gives you extra space from the very start.
More than just a credit limit
An FD based credit card is not only about how much you can spend. Many of these cards are lifetime-free, which means you don’t have to pay yearly fees but still let you enjoy the ease of a credit card. Your fixed deposit continues to earn interest at the same rate, so your savings keep growing.
Using the right card responsibly also helps build your credit score over time, making it easier to qualify for other financial products later. As these cards are given against your own deposit, the process of approval is often fast and simple, even for people who are new to using credit.
How it helps build your CIBIL score
Your CIBIL score works like your financial reputation. When you use your FD based credit card regularly and make payments on time, you start building a record that shows you can handle credit responsibly. Over time, this record can help you qualify for higher limits with no security needed. The key is to use the card consistently and make sure you always pay on time because even one late payment can harm your progress.
Using your FD based credit card wisely
A high credit limit is useful, but it is important to manage it carefully. Keep your utilisation low instead of maxing out the limit each month. Paying the bill in full before the due date ensures you avoid interest charges and keeps your utilisation ratio healthy. It is sensible to use the card mainly for planned expenses such as groceries, fuel, or utilities, which are easy to budget for. Avoid using the card for unnecessary cash withdrawals, as these often come with higher costs.
Figuring out the FD amount you need
The FD amount you choose should reflect your actual spending needs. Look at your average monthly costs and set your fixed deposit so it comfortably covers these expenses while leaving extra space for sudden needs. This way, you make sure you never feel restricted, but also don’t end up locking away more money than you are comfortable with.
Final Words
Opting for an FD based credit card is an example of using your money in a way that works on multiple levels. Your savings remain intact and continue to earn interest, you build a credit history, and you enjoy the convenience of a credit card without complicated eligibility checks or long approval waits.
This is a good example of hassle-free banking, where your financial arrangements are simple to set up, easy to manage, and give you peace of mind while helping you work towards your financial goals.
