Categories: Banking

Credit Card against Fixed Deposit (FD)-Feature and Review

When your credit history is totally at low and you are desperate to have credit card then the worst solution you can opt for is going for credit card on your Bank Fixed Deposits. Few banks offer such facility. But is it actually required?

Let us first understand who can opt such credit cards.

Persons who have bad credit history.
Persons to whom no banks are offering credit card because of above said reason.
Persons who are in desperate need of have credit card (I don’t know prompt them such desperation 🙂 ).
Persons who are habitual of online shopping where they can use ONLY Credit Cards.
Persons who find it easy to have two or more credit card than one to maintain billing cycle.

You see above list, and easily you can predict that none of above reasons are actually a healthy situation of one’s financial life. So what is the need? But still few banks offer such credit card facility and there are customers who are very much eager to have them.

Let us see few banks which offer these plans.

1) ICICI Bank’s Credit Card against Fixed Deposit–

Min Deposit Required-Rs.20,000
Min Tenure of Deposit should be 180 days.
Your Fixed Deposit must not have any lock in like Tax Saving FDs.
Minors and Foreign Nationals are not allowed.
Interest rate on credit card will be 2.49% PER MONTH. Means per year it will be 29.88% PER YEAR.
No Joining fee and annual fee.
Rs.100 off on movie tickets.
Minimum 15% savings on dining in leading restaurants.

2) SBI Advantage Plus Card–

Credit limit will be 85% of your FD.
Interest rate will be 2.25% PER MONTH.
Joining and annual fees are Rs.500.

3) Axis Bank Easy Credit Card–

Min Deposit will be Rs.20,000 and maximum is Rs.25,00,000.
No card will be issued against FDs such as Tax Saver FDs, Flexi-Deposits (Auto-sweep FDs), FDs in the name of HUF/Society/Trust/Companies.
Card will not be issued in minor’s name.
Joining Fee Rs.500.
Annual Fee is NIL.
Finance charges at 1.95% per month and cash withdrawal fee is Rs.250.

Other banks also offer such credit cards. But I restricted to few banks only.

So what are the disadvantages of owning such credit cards–

Your FD is no longer a liquid asset as it is linked to credit card.
If any due prolonged then banks will adjust such dues against FD.
Credit card is nothing but a loan. So using such facility often is not a good sign of financial life.
You are opting this facility only because no banks offered you credit cards freely. So any default in payment will again downgrade your credit history.
If you opted this card with intention of have more credit cards in your name then there is high probability of increase in your unnecessary spending.

BasuNivesh

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View Comments

Shubham says:

November 23, 2022 at 7:36 PM

Is it possible to shift a credit card from one fd to another?
- BasuNivesh says:
  
  November 24, 2022 at 9:24 AM
  
  Dear Shubham,
  I think YES. But check with your bank.
Rathikanth Patil says:

June 11, 2022 at 6:25 PM

If I take fd credit card and I will use properly,
Can my credit score will increase.

Now my credit score is 651 and if i want take it to 700 plus how long it takes
- BasuNivesh says:
  
  June 13, 2022 at 7:08 AM
  
  Dear Rathikanth,
  Yes, obivously.
Yash Patel says:

March 29, 2022 at 3:40 PM

If I close my fd credit card, will it affect my cibil score.
- BasuNivesh says:
  
  March 30, 2022 at 9:48 AM
  
  Dear Yash,
  NO.
Sourav sharma says:

February 12, 2022 at 1:50 PM

Credit card on against of fixed deposit… after closing of credit card how many days later fd can be broken ??
- BasuNivesh says:
  
  February 15, 2022 at 6:08 PM
  
  Dear Sourav,
  Either instantly or at maturity.
Chandan M says:

September 10, 2021 at 6:06 PM

I have made FD of Rs 10,000 and applied for Credit card does it effect my credit score if I fail to make repayment regularly???
- BasuNivesh says:
  
  September 11, 2021 at 10:30 AM
  
  Dear Chandan,
  If you fail any repayments, obviously it will impact your credit score.
Anuj sharma says:

July 14, 2020 at 11:17 PM

I have a credit card against fd and i had withdrawn fd i this case credit card will work or not ???
- Basavaraj Tonagatti says:
  
  July 15, 2020 at 8:10 AM
  
  Dear Anuj,
  It is up to your bank and credit score. Check with the bank.
Musaid says:

February 17, 2019 at 10:27 AM

What happened to Credit Card after Maturoty period of FD is over and we do not renew it?
Can we still use credit card or we have to handover that after term ending of term period?
- Basavaraj Tonagatti says:
  
  February 17, 2019 at 12:51 PM
  
  Dear Musaid,
  It is up to the bank to allow you or not to use with Bank FD based on that day's credit rating and risk.
Puneet says:

February 14, 2019 at 4:50 PM

Can we liquidate such credit card linked fixed deposits?
- Basavaraj Tonagatti says:
  
  February 14, 2019 at 5:59 PM
  
  Dear Puneet,
  Sadly NO.
Kumar says:

November 22, 2018 at 8:55 PM

I had applied for SBI credit card against 30000fd for 6 months. After my fd maturity if I have take my money then also credit card works or I have to handover to bank?
- Basavaraj Tonagatti says:
  
  November 23, 2018 at 6:18 AM
  
  Dear Kumar,
  In my assumption if your credit score not increased by that time, then you have to handover the card.
Salman says:

November 2, 2018 at 3:01 PM

Hello, I am a college student planning to get credit card from SBI by using a fixed deposit. My question is...what happens if the term period of the FD is over? Can I continue using the CC as normal or do I have to renew the FD for another term? This is assuming i never default on the CC payments. Thank you.