Kotak Mahindra Bank launches FD-backed credit card for low credit score holders

Kotak Mahindra Bank and the fintech platform super.money have introduced a credit card designed for people whom traditional lenders typically turn away. The Kotak811 super.money card is secured by a fixed deposit rather than creditworthiness, meaning someone with a damaged credit history can qualify if they have cash to lock away.

The mechanics are straightforward. You deposit money into a fixed deposit account—a minimum of Rs 1,000 to start—and the bank issues you a credit card with a limit equal to 90 percent of that deposit's value. If you invest Rs 5,000 or more, the card comes with no annual fee for life. Below that threshold, there's a joining fee of Rs 249 plus tax if you want a physical card. The fixed deposit continues earning interest at the bank's prevailing rate even while it secures your credit line, so your money is not simply frozen.

This is a product aimed at financial inclusion. People with low credit scores—those who have missed payments, defaulted on loans, or simply have no credit history—face near-total exclusion from the credit card market. Banks see them as risky. The Kotak811 card removes that barrier by replacing the credit score assessment with collateral. The bank's risk is capped because it can always liquidate the deposit if you don't pay.

But the terms reflect that risk calculation. The card carries an interest rate of 3.50 percent per month, which compounds to 42 percent annually. That is substantially higher than most unsecured credit cards. Additionally, the bank charges Rs 100 for each ATM withdrawal and fund transfer—fees that can accumulate quickly for frequent users. These costs are the price of access for those locked out of conventional credit.

The bank has also clarified its rules around exceeding the credit limit. Cardholders are not permitted to spend beyond their assigned limit under normal circumstances. However, the bank may grant an overlimit facility on a case-by-case basis if the cardholder consents, framed as a service gesture rather than a right. This discretionary approach gives the bank flexibility while keeping the door open for customers who occasionally need to exceed their limit.

Missed payments carry real consequences. Late payments trigger interest charges and fees. More significantly, persistent default—failure to pay for more than 60 days—can result in the bank liquidating your fixed deposit to recover what you owe. This is a powerful enforcement mechanism. It also means that missed payments will damage your credit score, the very thing you were trying to rebuild by using this card responsibly.

The product does offer one genuine advantage: you can withdraw your fixed deposit at any time if you need the money. When you do, your credit limit shrinks proportionally. This flexibility distinguishes it from some secured credit products that lock funds away entirely. You retain access to your capital, though using it reduces your borrowing capacity.

Kotak Mahindra Bank is also adjusting its broader credit card fee structure beginning December 5, 2025, though the specific changes were not detailed in the announcement. The Kotak811 card sits within this shifting landscape, positioned as a bridge product for people rebuilding their financial standing. Whether it serves that purpose or becomes another high-cost trap depends largely on how borrowers use it—whether they treat it as a tool to demonstrate reliability and eventually graduate to cheaper credit, or whether the high interest rates and fees keep them perpetually indebted.