Here are pros and cons of linking your credit card with UPI; details inside

The seamless and quick payment facility stands apart as a unique benefit while connecting a credit card to UPI. This also eliminates of the need to carry money or screen one's debit card balance

Credit card

Linking UPI with credit cards

Sonika Nitin Nimje New Delhi

Listen to This Article

The Unified Payments Interface (UPI) fills in as a real-time payment system working with seamless fund transfers between two banks through a mobile application. In India, UPI has acquired tremendous prominence, apparent from the amazing figure of more than seven billion transactions processed in September 2023.
A large number of UPI applications are open in India, for example, Paytm, PhonePe, Baroda MPay, Pockets-ICICI Bank, MobiKwik, iMobile, BHIM app, Airtel Money, Axis Pay, SBI Pay, and Yes Pay. Also, a few banks offer their own UPI applications.
In any case, the Reserve Bank of India (RBI) has recently authorized the linking of credit cards with UPI. This development accompanies its benefits and inconveniences.

Benefits of Linking UPI with credit cards

Upgraded convenience: Linking a credit card with UPI upgrades the comfort of using credit cards for smaller transactions. Through UPI, credit cards gain flexibility, becoming relevant for any transaction accepting UPI, enveloping online payments and peer-to-peer transfers.
Rewards: Linking these cards with UPI permits users to accumulate reward points on all transactions, including smaller ones. Some credit cards expand different rewards, for example, fuel points, dining advantages, and shopping benefits. Linking these cards to UPI grants clients to acquire such rewards on each transaction.
Credit limit: Credit cards usually come with higher credit limits contrasted with debit cards. Thus, people with a credit card linked to UPI can undertake more significant buys than they could with a debit card. This facility helps in situations where a client needs to make a sizable buy yet needs adequate funds in their bank account. 

Disadvantages of Linking UPI with credit cards

Habit to overspend: This is because of the nature of credit cards, permitting users to use funds they don't right now have, possibly causing interest charges on their buys. A few variables add to the simplicity of overspending when a credit card is connected to UPI.
Falling for a debt trap: Various credit cards include captivating rewards, for example, cashback or travel points, which can intensify the temptation to utilize a credit card for UPI transactions. Clients could see these rewards as an advantage for their spending.
High interest rates: Credit cards usually accompany raised interest rates, going from 18% to 48 percent for every annum. Inability to settle the credit card in full every month brings about users causing a significant measure of interest on the outstanding balance.

Also Read

Rupay forex card out soon: Should you pick one over a credit/ debit card?

What are cashback credit cards? Which are the best ones? How to pick?

As credit card transactions rise in India, debit cards take a backseat

India extends UPI services to France, first in Europe after Singapore

Asiad 2023: Indian Trap coach Dradi seen with Spanish team in Croatia

India's forex reserves drop $462 million to $590.321 billion: RBI

RBI allows banks to open current account for exports with vostro accounts

Hike in risk weights to hit banks' capital adequacy by 60 bps: S&P Ratings

Fedbank Financial IPO to open on Nov 22 at price band of Rs 133 to Rs 140

SBI to soon launch Yono Global app in Singapore and US, says official

First Published: Nov 17 2023 | 8:10 PM IST

Explore News