Debunking Common Myths About Credit Cards Secured by Fixed Deposit

We’ve all been there – standing at the checkout counter, ready to swipe our credit cards, but a little voice in our head whispers, “What if I can’t manage it properly? What if I get trapped in debt?” Now, imagine if we told you there’s a way to enjoy the perks of a credit card without the fear of overspending or falling into debt!

Yes, you heard that right! Today, we will bust some common myths surrounding FD Credit Cards and discover why they can be a fantastic addition to your financial toolkit.

Debunking 7 Common Misconceptions About Fixed Deposit (FD) as collateral for a credit card

Myth #1: “Credit Card against FD? Isn’t that something to do with Fixed Deposit?”

You’re spot on! A Credit Card against FD is indeed linked to a Fixed Deposit. But let’s not confuse it with locking your money away forever in some mystical vault. Consider it a security deposit you give a landlord when renting a place, except in this case, and it’s your credit card company. When you apply for a Credit Card, you must put some money in a Fixed Deposit account with the issuing institution. That amount becomes your credit limit – the maximum amount you can spend using your card. But don’t worry. It’s still your money and continues earning interest just like any other FD.

Myth #2: “So, I can’t use the Fixed Deposit money while it’s linked to my card?”

Your money is not locked away in a secret vault. It remains in the FD account, doing its thing and earning interest. Meanwhile, you get to enjoy the benefits of your Credit Card. It’s like having your cake and eating it too! As you make payments on time, you build a positive credit history, which can work wonders for your financial future.

Myth #3: “Am I stuck with this card forever, right?”

Life is all about change, and so are Credit Cards. As you build your creditworthiness with responsible usage and timely payments, you’ll eventually qualify for unsecured credit cards. When that day comes, you can bid farewell to the FD account and say hello to newfound financial freedom!

Myth #4: “Credit Cards must be boring with no rewards or benefits?”

You might be pleasantly surprised! While Credit Cards might not shower you with points for exotic vacations or the latest gadgets, they come with some sweet perks. You’ll often find cashback offers, discounts on shopping, dining, and more. The best part? Since your credit limit is linked to your FD, there’s no risk of overspending, ensuring you stay on top of your finances.

Myth #5: “Using a Credit Card against Fixed Deposit will hurt my credit score?”

This couldn’t be further from the truth! Using a Credit Card against fixed deposit responsibly can boost your credit score. Since a Fixed Deposit backs your credit limit, you’re less likely to overspend, miss payments, or accumulate debt. By consistently making on-time payments and keeping your credit utilisation low, you’ll be on the path to building a solid credit history. Lenders love to see this responsible behaviour, which will reflect positively on your credit report.

Myth #6: “Credit Cards against fixed deposits are only for people with bad credit.”

Not at all! Credit Cards are suitable for anyone looking to build or rebuild their credit, regardless of their current credit standing. If you’re a first-time credit card user, a student, or someone who wants to establish credit, these cards can be an excellent starting point. Plus, even with a good credit score, using a Credit Card against your fixed deposit can still be a smart move to keep your credit health in check.

Myth #7: “Will I be stuck with a low credit limit forever?”

While it’s true that your credit limit is tied to the amount you deposit in the FD account, it doesn’t mean you’re stuck with a low limit indefinitely. You may qualify for credit limit increases as you continue demonstrating responsible credit behaviour. Some banks even offer the option to add more funds to your Fixed Deposit, raising your credit limit. So, your credit limit can grow with time and good credit habits.


So, there you have it – the truth about Credit Cards, shining brightly like a beacon of financial wisdom! Remember, these cards are an excellent option for building credit and enjoying the convenience of plastic money while staying in control of your spending.

If you’re starting your credit journey or looking to improve your financial standing, consider the power of a Credit Card. And while you’re at it, remember to leverage OneCard – an exclusive, exquisitely crafted metal co-branded credit card that offers a seamless onboarding experience and amazing reward programs.