Should you link your credit card to UPI? Premium

Link your credit card to UPI for rewards, convenience, and emergency access to credit, but beware of overspending risks.

Since the integration of Rupay Credit Cards with UPI, a number of credit card issuers have launched Rupay variants of their popular cards, with some offering new cards on the Rupay network. Some card issuers have also started incentivising UPI payments with accelerated value-back.

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 your RuPay credit cards to UPI, you can earn rewards or cashback on UPI transactions, allowing you to maximize 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% CashPoints on UPI transactions and IndusInd Bank Platinum Rupay Credit Card offers 2% 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.

However, it is important for cardholders to check the capping and restrictions applicable to 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, a transaction value below ₹200 will not accrue any reward points.