Banks and Fintech Firms Turn to FD-Linked Credit Cards to Expand Customer Base

Banks and fintech companies are increasingly promoting fixed deposit (FD)-backed credit cards as part of their strategy to onboard new users. The product, which uses an FD as collateral, is being positioned as a secure and accessible way for customers to enter the credit ecosystem. This approach is particularly useful for first-time borrowers, students, and individuals with limited or no credit history. By linking a credit card to an FD, lenders minimize risk while giving customers the opportunity to build or improve their credit score. Industry experts say the rising popularity of FD-tied credit cards reflects the demand for safer lending models. These cards not only provide credit access but also allow customers to continue earning interest on their deposits, making them a dual-benefit product. Fintech players are also integrating innovative features such as instant approvals, digital onboarding, and flexible repayment options to attract tech-savvy users. With customer acquisition costs rising, FD-backed cards are becoming a practical entry-level product for the industry. Analysts believe this trend will continue as financial institutions seek to balance growth with risk management. FD-linked credit cards could play a significant role in expanding formal credit access in India.