The biggest barrier for first-time credit card applicants, students, homemakers, and self-employed professionals in India is the income proof requirement. Banks want 6 months of salary slips or 2 years of ITR — neither of which a fresher, freelancer, or homemaker can provide. An fd credit card bypasses this barrier entirely by using a fixed deposit as collateral.
This guide explains how an FD credit card works, why it is the smartest way to apply for credit card as a first-timer, and how to use it correctly to build a strong CIBIL score within 12–18 months.
How an FD Credit Card Works
An FD credit card (also called a secured credit card) is linked to a fixed deposit you place with the bank. The bank holds the FD as collateral and issues a credit card with a limit equal to 80%–90% of the FD amount.
| Feature | FD Credit Card | Regular Unsecured Credit Card |
| Collateral required | Fixed Deposit (₹10,000+) | None |
| Income proof needed | No | Yes (salary slip or ITR) |
| Credit history required | No | Preferred |
| Credit limit | 80%–90% of FD amount | Based on income |
| FD interest earned | Yes — full FD earns interest | Not applicable |
| CIBIL score built | Yes — same as regular card | Yes |
| Upgrade possible | Yes — after 12+ months good history | Yes |
Who Should Apply for an FD Credit Card?
- Fresh graduates and students: No salary slips yet — an FD card builds credit history before your first job
- Homemakers: No formal income proof — an FD card in your name builds independent credit history
- Freelancers and gig workers: Irregular income makes regular card approval difficult — FD card removes the income barrier
- Self-employed professionals: ITR filing in Year 1 of business may be insufficient — FD card bridges the gap
- Anyone with a low CIBIL score: A secured card is often the only card available when your score is below 650
The FD Amount — How Much Do You Need?
The minimum FD amount for a secured credit card varies by bank — typically ₹10,000–₹25,000. Your credit limit will be 80%–90% of this FD. For practical daily use and credit building, a ₹25,000–₹50,000 FD giving a ₹20,000–₹45,000 credit limit is ideal.
| FD Amount | Credit Limit (approx 85%) | Monthly Spending for 30% Utilisation |
| ₹10,000 | ₹8,500 | Below ₹2,550 |
| ₹25,000 | ₹21,250 | Below ₹6,375 |
| ₹50,000 | ₹42,500 | Below ₹12,750 |
| ₹1,00,000 | ₹85,000 | Below ₹25,500 |
Does the FD Still Earn Interest?
Yes — this is one of the most overlooked advantages of an FD credit card. The fixed deposit continues to earn interest at the full FD rate (typically 6%–8% per annum for most banks). You effectively earn interest on the FD while also using the credit limit. The bank only liquidates the FD if you default on the credit card — which you can avoid by paying the full outstanding every month.
How to Use an FD Credit Card to Build Your CIBIL Score
- Step 1: Open the FD with the bank and link it to a new FD credit card — this typically takes 7–10 working days
- Step 2: Use the card for 2–3 small, regular purchases each month — utility bills, groceries, subscriptions
- Step 3: Keep monthly usage below 30% of the credit limit (e.g., below ₹6,000 on a ₹20,000 limit card)
- Step 4: Pay the FULL outstanding, not just the minimum due, before the payment due date every month without exception
- Step 5: After 12–18 months of good payment history, request an upgrade to a regular unsecured credit card with higher limit
What Happens to the FD When You Upgrade?
After demonstrating 12+ months of responsible card use, most banks allow you to upgrade your FD credit card to a regular unsecured credit card. At this point, the FD is released back to you — either as a renewed FD, a payout, or transfer to your savings account. Your CIBIL score, built during the FD card period, now makes you eligible for premium cards with higher limits, better rewards, and lower fees.
AU Bank NOMO Credit Card — FD-Backed with No Annual Fee
AU Bank’s NOMO credit card is a zero annual fee, FD-backed credit card designed for first-time users and those building credit. It earns reward points on all spends, includes fuel surcharge waiver, and links directly to an AU Bank fixed deposit as collateral. There is no income proof requirement — just a valid FD with AU Bank and a completed KYC.
Common FD Credit Card Mistakes to Avoid
- Letting the FD lapse: If the FD matures and you do not renew, the bank may cancel the credit card — set auto-renewal on the FD
- Closing the FD to withdraw funds: Breaking the FD liquidates the collateral and closes the credit card — plan FD tenure carefully (typically 1–3 years)
- Using 90%–100% of the credit limit: High utilisation hurts CIBIL even with on-time payments — stay below 30%
- Treating it as a cash advance source: Cash withdrawals from an FD credit card attract 3%–4% per month interest from day one — avoid completely
⭐ Key Takeaways
- An FD credit card requires no salary slip or income proof — just a fixed deposit as collateral
- The FD continues to earn interest while the credit card builds your CIBIL score simultaneously
- Credit limit is 80%–90% of the FD amount — keep monthly usage below 30% of the limit
- Pay the full outstanding every month — the FD is only liquidated in case of default
- After 12–18 months of good payment history, upgrade to a regular unsecured card and get your FD back
- AU Bank’s NOMO credit card is a zero-fee FD-backed option designed for first-time credit users
Frequently Asked Questions
Q: What is the minimum fixed deposit amount to get a credit card against FD?
A: The minimum FD amount varies by bank — typically ₹10,000–₹25,000. AU Bank’s NOMO credit card requires a minimum FD of ₹10,000 for credit card issuance. A ₹25,000–₹50,000 FD is recommended for a more useful credit limit and better CIBIL-building opportunity.
Q: Can I withdraw money from my FD if it is linked to a credit card?
A: No. The FD linked to a secured credit card is locked as collateral and cannot be prematurely withdrawn while the credit card account is active. Breaking the FD terminates the credit card. Plan your FD tenure (typically 1–3 years) to match your credit building timeline.
Q: Does an FD credit card earn the same reward points as a regular credit card?
A: Yes. An FD credit card earns reward points on purchases exactly like a regular credit card. The only difference is the collateral requirement — the reward structure, billing cycle, and payment terms are identical to a standard unsecured card.
Q: Is there an annual fee for an FD credit card?
A: Most FD credit cards are offered with no annual fee or a very low fee (₹500–₹1,000) since the bank holds the FD as security. AU Bank’s NOMO credit card is a zero annual fee secured card — check the current fee schedule on the bank’s website before applying.
Q: How quickly can I upgrade from an FD credit card to a regular card?
A: Most banks review upgrade eligibility after 12 months of good payment history on the FD credit card. Eligibility also depends on income growth — if you can now provide salary slips or ITR, the upgrade process is faster. Contact the bank after 12 months to initiate the review.
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