If you are looking for a credit card and don’t have a credit score, this article will help you understand what your options are in the market. We will explore card types and basic requirements to get a credit card without a credit score. You may have heard the term "FD backed credit card" recently. We will deep dive into all the characteristics of an FD backed card and its features and benefits.

Credit cards fall under two categories: Secured Credit Cards and Unsecured Credit Cards.

Secured credit card - A consumer who does not have a credit score is eligible to apply for a secured credit card.

Note: An unsecured credit card is only offered to customers who have a good credit score. Now, FD backed credit cards are secured credit cards, where the card is dispatched to you against the FD account. Let us understand what exactly happens.

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You want a credit card but don’t have a credit score. What can be done?

Once you approach the bank, the bank will ask you if you have an FD account. Now you may think, "Why FD account?"

This FD account will act as a security deposit against which the credit card will be issued. If you don’t have an FD account, no issues. Kotak811 helps you to open an FD account and apply for a credit card against that account.

What are the benefits of FD backed credit cards?
1. It will help you get a credit card
2. You will get a credit limit which is 90% of the FD amount
3. Your FD is safe and earns higher interest for the booked tenure
4. Once you start paying credit card bills on time, you will automatically build your credit score
5. You can start an FD account with a minimum of Rs.5000/-

You must be thinking, is this a safe process to get a credit card?
Let us help you with that. The FD is completely safe and insured by DICGC. Also, an FD is known to be one of the safest investment options with guaranteed returns. So, don’t worry, the FD will act as a refundable investment, where you can enjoy the high interest rate of an FD account and get a credit card.

Is it possible to close the FD midway?
Let’s keep the credit card aside; usually it is suggested not to close an FD account. Since it earns you higher returns after maturity and is a good investment option. Still, if you have to dissolve your FD account, it is easy. The money in your FD account will be credited to your personal account post-deduction of credit card bills (if any).

Is it possible to improve credit score without the FD backed credit card?

The catch with credit scores is that you can only improve your credit score by using a credit product. In that case, an FD backed credit card is an ideal choice that will help you to grow your credit score. Once you have a good credit score, you can apply for a normal credit card.

A good thing about an FD backed card is that the credit limit is within the range of your FD account balance and you don’t have to worry about overusing your credit limit.

Questions you may have:
1. What is an FD backed credit card?
When a credit card is issued against an FD account, it is called an FD backed credit card. The money in your FD account serves as the security deposit against which the card is issued. Customers who do not have a credit score can apply for an FD backed credit card.

2. Can I withdraw money using my FD credit card?
Yes, ATM withdrawals are allowed. The credit limit assigned against an FD is 90% of the amount deposited in your FD account.

3. Does an FD credit card increase credit score?
Yes, regular payment of credit card bills will definitely increase your credit score.

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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.