Should you link your credit card to the UPI? Advantages and disadvantages explained | Mint

A credit card is undoubtedly a powerful weapon in today’s time and age to make online payments. Not only does it offer a great degree of convenience and comfort but gives a number of rewards and cashbacks.

Meanwhile, it is important to remember that UPI payments are growing faster than card payments. Payments via UPI touched 2.34 lakh crore in Oct 2024, reflecting an increase of 37 per cent in the past 1 year, the latest RBI data shows.

Now what if you use UPI and get a credit line on it. This is like being able to enjoy the best of both worlds. In other words, this is similar to getting the UPI service activated on the credit card.

Is this advisable or not, we share some key advantages and disadvantages.

These are some of the key advantages

1.Can seek credit on the go: Unlike UPI service, a credit card enables users to use the credit line as and when they want. Typically, each UPI payment leads to a debit of a savings bank account, but it does not happen in case of a credit card.

2.Shorter bank statement: When you pay for every small expense through your bank account, a bank entry takes place for that transaction. In other words, when that transaction goes via a credit card, only the payment to the credit card will reflect on the bank statement, thus cleaning your bank statement to a large degree.

3.Streamlining of finances: Typically, most UPI users also have a credit card which they use for large expenses only. So, instead of using different channels for different categories of expenses, you can use just one way for all the payments. It helps you streamline your finances in a better way.

These are some of the key disadvantages

1.Overstretching of expenses: There is often a tendency among users to overspend when you have a credit line. When the money doesn’t go to your bank immediately, you end up overstretching your budget. So, linking all small and big expenses to your credit card may lead to over-spending.

2.Too many eggs in one basket: Thanks to technology, payments have become overly convenient and seamless. However, in case of any technical snag or error, things may come to a standstill. Therefore, it is always advisable to spread out your payments via multiple channels or systems.

3.Losing out on some benefits: Not every bank’s card offers activation of UPI. So, if you want to capitalise on some of the cashbacks or benefits, you can’t do that if you stick to only one card and one service.

For instance, some cards may offer access to golf, special events and discounts. But if you stick to only one card because of its UPI feature then you stand to lose out on the benefits offered by other cards.

(Using a credit card carries its own set of risks.)