Regular Credit Card Vs Credit Cards Against Fixed Deposit - Kotak Bank
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28 APRIL, 2023

India has seen a tremendous upsurge in the credit card market. With several advancements and technological improvements, there are numerous developments in the area.

Smooth onboarding processes, unique card products, personalised offers and rewards, and improved mobile apps are just a few of the new features that these improvements provide.

Over the past five years, the credit card market in India has grown at a 20% compound annual growth rate (CAGR). In July 2022, there were 78 million active credit cards in India.

The post-pandemic credit card market has seen a significant transformation and is continuously changing due to the emergence of e-commerce and the acceptance of contactless payments.

Nowadays, just like you can take out a loan against your fixed deposit, you can also get a credit card against it. People who have difficulty qualifying for a credit card due to their low income or credit score can avail of an FD credit card.

So how does a regular credit card differ from a credit card against FD? In this blog post, we will look at the differences between a standard and a fixed deposit credit card.

What is a regular credit card?

A regular credit card is a payment tool used to make purchases and access money. Credit cards issued by banks and other financial organisations serve as a line of credit.

Credit cards provide users with convenience and security, as they can be monitored and tracked in case of fraud or theft.

H3: Benefits of a regular credit card

A credit card offers numerous benefits to the cardholder; some of them are:

  • The main advantage of a credit card is that it allows making payments quickly and conveniently, both online and in-store.
  • Credit cards also provide a secure way to access credit and can help build up a financial history and credit score.
  • Numerous credit cards provide rewards and exclusive deals like cashback and discounts.
  • Also, many credit cards offer additional protection against fraudulent purchases.

What are credit cards against FD?

As the name implies, a credit card offered by a bank to a person against their FD (fixed deposit) the customer guarantees as security for the card is known as a credit card against FD.

Customers having FD accounts at banks and other financial organisations who want to establish credit scores are given secured credit cards.

These cards are helpful for people who have low credit scores and incomes. Credit cards against FDs provide the same function as a regular credit card.

Benefits of a secured credit card

A credit card backed by fixed deposits also offers great advantages, including:

  • A person with a low income and credit score can also apply for an FD credit card since the FD itself backs it.
  • Secured credit cards may be a great tool for those with poor credit or no credit to build or improve their creditworthiness, boosting their eligibility for loans shortly.
  • Banks typically provide secure credit cards with lower interest rates, as fixed deposits can be used as security.
  • When using a card to make a transaction, secure credit cards provide several types of rewards and discounts.

What distinguishes a credit card against FD from a regular credit card?

Regular credit cards and credit cards backed by fixed deposits function similarly, but they have some differences. Let us see a few of them:

  1. Collateral

With a regular credit card, there is no collateral requirement. However, credit cards backed by FDs keep fixed deposits as collateral.

So if cardholders do not pay their due amount or interest, the card provider can seize their FDs to recover the amount.

  1. Income requirements

For a secured credit card, the fixed deposit serves as the security, so additional income documentation is not required.

However, a person has to provide income proof with a regular credit card.

  1. Credit score

A person with a low credit score can get a fixed deposit credit card. In contrast, a person might not get a regular credit card if the credit score is low. The criteria for credit scores will vary according to card providers.

  1. Interest rates

Most secured credit cards that banks provide have much lower interest rates than regular credit cards. This is because fixed deposits act as security, which lowers the interest rate.

  1. Documents required

Applicants do not need to provide additional documents to prove their identification or place of residence if they already have a fixed deposit with the bank. A secured credit card may be applied right away using the FD.

Conversely, with a regular credit card, applicants have to provide the necessary documents.

  1. Withdrawal

Users of secured credit cards cannot terminate their fixed deposit accounts before the card is closed or expires. Nevertheless, this is not the case with a regular credit card.

  1. Credit card limit

Banks use the fixed deposit value to decide the credit limits for secured credit cards. The secured credit card’s credit limit normally ranges between 80% and 90% of the fixed deposit amount.

Conversely, in a regular credit card, card providers decide the credit limit based on the applicant’s income and credit score.

Cardholders can also increase their credit card limit to get the most out of their credit card.


Secured credit cards give the same benefits as regular credit cards on purchases made with them, such as reward points, coupons, discounts, etc. Additionally, they provide an interest-free credit period and impose financial costs for late payments of credit card bills.

For those with a poor credit rating, little income, or who are not eligible for a regular credit card, a credit card against a fixed deposit works well.

Just be cautious not to touch the FD funds until they have matured. Nevertheless, getting a regular credit card or a credit card backed by FD serves a similar purpose. Of course, one must be a disciplined spender to use them wisely.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.