Banks are increasingly offering fixed deposit-backed credit cards, providing a flexible and accessible route to building credit for students, young professionals, and those with limited credit history, while allowing them to earn interest on their deposits.
For people with little or no credit history, getting a conventional credit card can be difficult because lenders usually look at repayment behaviour, income and past borrowing records. That is where a credit card backed by a fixed deposit can offer an easier route into formal credit. The product uses the deposit as security, allowing the customer to borrow against savings rather than depend entirely on an established credit profile.
In practice, the card works much like a standard credit card. It can be used for online shopping, merchant payments and bill payments, while the linked fixed deposit remains in place and continues to earn interest. According to ICICI Bank, such cards can offer a credit limit of up to 90% of the deposit value, while IDFC FIRST Bank says its secured card can match the full value of the fixed deposit. Other banks and personal finance platforms, including Paisabazaar and LiveMint, note that the limit usually falls somewhere between 70% and 90%.
The main attraction is accessibility. Because the fixed deposit acts as collateral, lenders often require less documentation and may place less emphasis on income proof or a long credit record. That makes this type of card useful for students, young professionals and first-time borrowers. It can also help people rebuild their credit profile, as issuers generally report repayment behaviour to credit bureaus. If the bill is paid on time and balances are kept under control, the card can become a stepping stone to unsecured credit later on.
Still, the product is not without trade-offs. Applicants should check the minimum deposit requirement, the tenor of the fixed deposit, fees, interest charges and how much of the deposit will count towards the credit limit. ICICI Bank says the deposit remains under lien until the card relationship ends, and the bill must still be paid separately. DCB Bank’s secured card, for example, shows how issuers may add perks such as rewards and lifetime-free membership, but the central appeal remains the same: a way to access credit while keeping savings invested and earning interest.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
