Low Credit Score? You Can Still Get a Credit Card Using an FD-Backed Option

A low credit score often becomes a major roadblock for people trying to access loans or credit cards in India. Job loss, medical emergencies, missed EMIs, or poor spending habits can quickly pull down a credit score, leading banks to reject applications outright. However, there is a practical and increasingly popular solution for such individuals—FD-backed credit cards.

These cards allow users to rebuild their credit profile while enjoying the convenience of a regular credit card, making them an effective stepping stone toward long-term financial stability.

What Is an FD-Backed Credit Card and How Does It Work?

An FD-backed credit card is issued against a fixed deposit opened with a bank. The FD acts as collateral, reducing the lender’s risk. Based on the FD amount, the bank provides a credit limit—usually around 80% to 90% of the deposit value.

For example, if you open a fixed deposit of ₹50,000, you may receive a credit limit of ₹40,000 to ₹45,000. If the cardholder fails to pay dues on time, the bank can recover the outstanding amount from the FD. This security is why banks are willing to issue these cards even to individuals with low or no credit scores.

Since the risk is minimal for banks, the documentation process is simple, approvals are quick, and income requirements are generally relaxed. This makes FD-backed credit cards especially suitable for first-time users, low-income earners, freelancers, or those recovering from past financial setbacks.

A Powerful Tool to Rebuild Your Credit Score

One of the biggest advantages of an FD-backed credit card is its ability to help improve your credit score over time. These cards are reported to credit bureaus just like regular unsecured credit cards.

To rebuild your score effectively:

• Keep monthly spending below 30% of your credit limit

• Pay the entire bill amount on or before the due date

• Avoid cash withdrawals or rolling over balances

With disciplined usage, users can see noticeable improvement in their credit score within 6 to 12 months. As timely payments accumulate, past defaults start losing their impact, making you eligible for better financial products such as personal loans, home loans, or premium credit cards in the future.

Benefits That Go Beyond Credit Access

FD-backed credit cards offer more than just credit score recovery. Most cards come with features similar to regular cards, including online transactions, bill payments, fuel spends, and even basic reward programs.

They also encourage financial discipline, as users are spending against their own deposited money. This controlled exposure to credit helps users understand repayment cycles, budgeting, and responsible borrowing—skills essential for long-term financial health.

Important Precautions to Keep in Mind

While FD-backed credit cards are helpful, they are not without limitations. Interest rates on outstanding balances can be relatively high, so carrying unpaid dues can quickly erode the benefits of the fixed deposit.

Additionally, breaking the FD before maturity may attract penalties and impact liquidity. Since the FD amount remains locked, users should ensure they have sufficient emergency funds elsewhere.

These cards are best suited for:

• First-time credit card users

• Individuals with low or damaged credit scores

• Those in financial recovery mode

People with strong credit scores may find better value in unsecured cards offering higher rewards and benefits.

Smart Usage Strategy for Maximum Impact

Start by using the card for small, regular expenses such as groceries, mobile bills, or utility payments. Track transactions through the bank’s app and stick to a predefined monthly budget. This ensures controlled usage and consistent repayments.

After maintaining good credit behaviour for about a year, users can apply for a regular unsecured credit card. In many cases, banks themselves offer an upgrade once the credit score improves.

Think of an FD-backed credit card as financial training wheels—designed to help you regain balance, confidence, and control before moving on to more advanced credit products.

Building a Stronger Financial Future

A low credit score does not have to define your financial future. With patience, discipline, and the right tools, recovery is entirely possible. FD-backed credit cards provide a safe, structured, and effective way to rebuild trust with lenders while maintaining financial stability.

Used wisely, they can turn today’s credit challenges into tomorrow’s financial opportunities.

Disclaimer: This article is for informational purposes only. Credit card terms, interest rates, and eligibility criteria may vary by bank. Readers are advised to review official bank policies or consult financial experts before making decisions.