October 22, 2025 · 9 mins read
Santosh Kumar
A common question people tend to ask is: Can you transfer money from an FD credit card? Let's take a look at how it works, what it means for your finances, the advantages and disadvantages and points to consider before using this facility.
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First, before we look at withdrawals, let's clarify what an FD credit card is.
An FD credit card is a secured credit card issued by a bank against your fixed deposit. Instead of providing you with an unsecured line of credit, the bank will use your FD as collateral. FD credit cards will typically give you a credit limit of a percentage of your FD amount, normally between 75% and 90%.
For example, if you have a fixed deposit of ₹1,00,000, your credit limit on your credit card would most likely give you a credit limit of between ₹75,000 and ₹90,000 based on the bank's terms.
These cards are especially helpful for:
1: Individuals without credit histories are interested in building credit.
2: Individuals with low credit scores have no access to a normal type of credit card.
3: Those wanting to enjoy the normal benefits of credit cards without any financial risk to the bank.
Your FD will keep earning interest where it serves as security for the credit card, whilst you enjoy all other functions that come with routine credit cards: rewards, cash back, and EMI options.
Yes, you can withdraw money from an FD credit card, but there are certain stipulations and fees attached. Just like a regular credit card, you can withdraw cash from ATMs with an FD credit card. This is subject to a cash advance limit, which is usually between 20% and 40% of your total credit limit.
For a total credit limit of ₹80,000, you could cash withdraw between ₹16,000 and ₹32,000.
Cash withdrawal options save you in an emergency, but it comes at a higher cost than normal, where cash withdrawals have high interest, immediate finance charges and sometimes cash advance fees.
Also Read: Difference Between Annual Fee and Joining Fee
1: Locate an ATM that accepts credit cards.
2: Insert the FD credit card.
3: Select "Credit Card" and choose to make a "Cash Withdrawal."
4: Enter the amount to withdraw within your permitted cash limit.
5: Confirm the transaction and take your cash.
Also Read: Foreign Transaction Fees on Indian Credit Cards
While withdrawing cash using your FD (Fixed Deposit) credit card may seem seamless, it is important to consider the costs associated:
Cash Advance Fee - Most banks will charge 2.5% to 3% of the cash withdrawal amount (with a minimum fee they will charge - e.g., ₹300). So, if you withdraw ₹10,000, you may pay a ₹250-₹300 fee (immediately).
Finance Charges (interest) - Interest on cash withdrawn from a credit card starts immediately and can be as low as 2.5% to 3.5% each month (equivalent to 30% to 42% per year).
No Grace Period - Unlike most credit card purchases, where you have a 45-50 day period (not charging interest), there would not be any time before interest starts accruing (immediately). Interest is charged from the day you withdraw until you ever pay it back.
Additional ATM charges - If you decide to withdraw cash from a different bank's ATM, additional fees may be charged.
GST - Any applicable GST is charged on funds accelerated, on fees or interest based on a cash withdrawal or cash advance.
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A major benefit of FD credit cards is that your fixed deposit remains safe, and you can earn interest on the fixed deposit money as well. Using the credit card or spending on the card does not have an impact on your FD. If you do not pay your card payments, the bank has the right to liquidate your FD to pay for the unpaid debt. Therefore, you may lose all or part of your fixed deposit.
Make sure to pay on time and keep track of your spending. FD credit cards are a common choice for many reasons, primarily that they are easy to get and helpful for those just starting on their credit journey. Here are a few of their advantages:
1: Higher chances of approval - As the card is usually backed by your own deposit account, banks are more willing to issue it.
2: Credit history - Using your FD credit card responsibly can help you grow your credit score.
3: Earning interest on FD - When pledging a fixed deposit, it will continue to earn interest.
4: Benefits - The same benefits of regular use, i.e., cash back, rewards points, discount, or other perks.
5: A more flexible credit limit - Your limit can increase if you increase the amount in your FD account or show a pattern of good repayment behaviour.
6: Emergency access to FD - You can withdraw cash or use the credit card for urgent expenses without accessing or breaking your FD.
Also Read: Should You Use a Credit Card for High-Value Purchases?
While cash withdrawal is a convenient option for utilising your FD credit card, it does come with drawbacks:
1: Expensive and high-interest fees: Cash withdrawals cost you because of high interest and fees.
2: Interest accrues immediately: Unlike a purchase, you don’t get a grace period.
3: You lose your FD: If you can’t pay back cash withdrawn (and switch back to a normal line of credit), the FD can be forfeited.
4: It can impact your credit score: If you pay late, it can negatively impact your credit history.
5: Withdrawal limits: You can't withdraw the entire credit limit; you can only withdraw part of your credit.
1: Don’t make frequent cash withdrawals. Make cash withdrawals your last choice. Use digital or card transaction purchases instead of cash withdrawals when you can.
2: Pay your dues on time. Always pay the full amount due before the due date so you won’t incur interest.
3: Keep track of your FD and your Credit Card Balance. Be mindful of your spending and remaining credit to protect yourself from overspending.
4: Don’t cancel your FD. Once you cancel the FD, you can expect either a limit decrease or funds to become available for early withdrawal without penalty.
5: Be responsible with small purchases and pay them back on schedule if you would like to improve your credit score.
6: Keep a buffer fund, or emergency fund, to reduce the chances of needing to utilise the cash withdrawal.
Also Read: When to Convert Credit Card Payments into EMI?
If you don't repay the withdrawn amount or your overall dues:
1: The bank will apply compounding interest on whatever remains to be paid.
2: Your credit score will decrease due to late or missed payments.
3: Before long, if your dues remain outstanding, the bank can close your FD to recover the dues.
4: You will forgo earning interest on that portion of your existing FD.
Cash withdrawals from FD credit cards should generally be avoided as a matter of practice, and should only be done in an emergency, such as unexpected medical bills, travel, or any other sudden, unseen bills, since paying cash advances is usually quite high-cost.
If you are withdrawing cash regularly, it might indicate the need for better financial planning. Instead consider:
1: A personal loan against FD (interest rate should be lower than cash advances).
2: Loans or short-term credit lines via UPI against the same bank.
3: A small amount of the due amount (at this point, it's killing direct access) can be closed right away instead of incurring fees for regularly using a credit card.
Always compare the cost when using cash advances with breaking the FD. Sometimes, closing a small portion of the FD may be cheaper than paying a 40% annual interest rate.
An FD credit card is an excellent financial tool for establishing credit history, creating an emergency fund, and allowing the comfort of a credit line with relatively low risk. But withdrawing cash is extremely costly, and misuse can lead to losing your fixed deposit or ruining your credit.
Use your FD credit card efficiently by making wise purchases, making all payments on time, and using credit in a disciplined way. If you use it this way, you can have its benefits without risking your savings or credit.
Also Read: Online Shopping with Credit Cards – Safety Tips
If you choose to withdraw cash, you can only withdraw a portion of your total credit limit (normally 20% to 40%, depending on the lender).
You will not lose your FD directly. Your fixed deposit will be safe until you default on your card payments, and the bank will then liquidate your FD to cover the dues.
The moment cash is withdrawn, interest will be charged from the time of withdrawal until it is paid back.
Cash can be withdrawn if you have international use enabled. However, you will incur additional foreign transaction and ATM charges.
If you need cash, consider applying for a loan against your FD, where the interest rate will be lower than withdrawing cash from a credit card.
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