Secured Credit Card

Credit

A secured credit card is issued against a Fixed Deposit as collateral. The credit limit is 80-90% of the FD amount. Designed for people with no credit history (students, new employees) or poor credit history. Using it responsibly builds CIBIL score.

In detail

How secured credit cards work:n1. Open FD of Rs 20,000-1,00,000 with a bankn2. Bank issues credit card with Rs 16,000-90,000 limit (80-90% of FD)n3. FD earns normal interest (5.5-7%) and remains intactn4. Card works like any credit card -- use and repay monthlyn5. After 12-18 months of good usage: bank upgrades to regular unsecured card, releases FDnnPopular secured cards: SBI Card backed by SBI FD, Kotak 811, HDFC Millennia (against FD), Axis Bank Insta Easy.nnStrategy: secured card + pay full bill monthly = credit history built, FD interest earned, score improves.

Real-life example

🇮🇳 India example

Rohan (22, first job) opens Rs 25,000 FD. Bank issues secured card with Rs 20,000 limit. He uses Rs 5,000/month (25% utilisation) and pays full amount by due date every month. After 18 months: CIBIL score 765. Bank converts to regular credit card, releases his Rs 25,000 FD (now Rs 28,750 with interest).

Frequently asked questions

Is the interest earned on the FD reduced because it's securing a credit card? ▼

No. The FD earns full prevailing interest rate regardless of the credit card secured against it. The FD is simply blocked as security -- you cannot withdraw it until the card is cancelled or converted to unsecured. You earn full FD interest throughout.