Earlier, UPI transactions were limited to the funds available in your savings account. With the linking of credit cards with UPI, you can make UPI spends using the limit available on your credit card, eliminating the need to carry a physical card everywhere.

In addition to offering convenience of digital payments, this facility opens up more opportunities for cardholders to earn rewards and cashback. However, it also comes with the risk of overspending along with certain other downsides.

Let us begin with the advantages of adding your credit cards to UPI.

Value-back

Rewards are one of the most important advantages that credit cards have over debit cards. By linking RuPay credit cards to UPI, you can earn rewards or cashback on UPI transactions, allowing you to maximise benefits on everyday expenses like groceries, dining, or bill payments.

Of late, several UPI-focused credit cards have also been launched, which provide accelerated rewards or cashback on UPI spends. For example, HDFC UPI Rupay credit card offers up to 3 per cent CashPoints on UPI transactions and IndusInd Bank Platinum Rupay Credit Card offers 2 per cent rewards on UPI spends.

Rupay variants of other popular cards like Tata Neu Infinity HDFC credit card and Myntra Kotak credit card provide value-back on UPI transactions, though at the base rate.

Check caps

However, it is important for cardholders to check the capping and restrictions applicable on UPI transactions. For example, HDFC Moneyback Plus credit card caps the rewards on UPI spends at 500 points per month. Moreover, all small value transactions may not earn rewards. For instance, if the reward rate is 5 points per ₹200, transaction value below ₹200 will not fetch any reward points.

Convenience

Another major advantage of credit cards on UPI is wider acceptance. Making payment through credit cards could be a challenge at kirana stores and local shops as most of these do not have POS machines. By linking your credit card to UPI, you can make instant payments almost everywhere without the need for physical cards.

Easy credit access

Linking your credit card to UPI acts as a backup payment option, which allows you to make big-ticket purchases or make a sizeable payment in case of emergencies even if you have limited funds in your bank account.

While linking your credit card to UPI offers convenience and additional purchasing power, incurring several smaller transactions on your card may be difficult to track and could lead to overspending. Hence, like any other credit card, it is advisable to track your outstanding balance, before the dues become difficult to manage.

Adding your credit card to UPI can be quite beneficial if used wisely. It not only makes your transactions more convenient but also allows you to maximise credit card rewards and benefits. Evaluate your spending habits and select a credit card that best suits your lifestyle.

With responsible usage, you can effectively maximise the benefits of linking credit cards with UPI.

(The writer is chief business officer, credit cards, Paisabazaar)

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