January 22, 2026 · 5 mins read
Santosh Kumar
If the student has an FD-backed credit card issued by a bank that supports UPI payment processing, then the student can use their FD-backed credit card to pay via UPI.
An FD-backed credit card is a type of credit card that secures the amount of credit that can be borrowed against an FD. The bank uses an FD as collateral against the loan. Therefore, when a student applies for an FD-backed credit card, the bank does not require proof of income or a history of using a credit card. This makes this type of credit card an ideal option for students who may not have Significant income from a job or providing proof of income through tax returns.
If a student is paying for goods using their FD-backed credit card through UPI, the purchase will be recorded as a transaction using the FD-backed credit card and will create new outstanding debt to be paid back to the bank by the specified due date. In contrast, if the student paid for the goods using a UPI link, the payment would be recorded as being made from the student's bank account, that is, the student would not build a debt balance with their bank as a result of the UPI-linked payment.
While the rules of the FD-backed credit card may permit students to pay for items as per standard rules for using credit cards, the structure of the FD-backed credit card allows students to develop an understanding of the mechanics of credit including how billing cycles, due dates, and interest-free periods work. As long as a student pays their bills on time, the student can develop these relationships with the Credit Card Provider while taking advantage of the educational opportunity to gain valuable experience in credit.
Using UPI for repayment purposes, is often a wise move when it comes to establishing a good credit profile early on. However, it is important to remember that the credit bureaus are aware of the repayment history and therefore timely payment by a student, will indicate a positive history to the bureaus, assisting in their ability to obtain and secure unsecured credit cards, education loans and/or personal loans in the near future. Not making timely payments will do the opposite by negatively impacting the student's credit profile.
Also Read: What Is GSTIN? Format, Structure, and Meaning Explained
Another point to keep in mind while using a UPI to repay a loan is the need for good financial discipline. A UPI payment process naturally creates a false sense of ease and a sense of 'effortless' spending due to the nature of how the payment is made. The money initially borrowed will not be automatically deducted from the account, and this leads to overextending themselves financially, since many people do not pay attention to their spending habits or what is in their accounts. To avoid this, a student should ensure they have the means to continue making timely payments to the lender.
Also Read: Annual Fee vs Lifetime Free Cards
A standard credit card associated with a Financial Institution may have as much protection and recourse against fraud and dispute as would a regular credit card. If an unauthorised purchase is made, the credit card holder can report and have that unauthorised transaction investigated by the issuing Bank. The level of dispute protection available for a UPI payment is much stronger than that which is available through alternative payment options.
Before opening an FD-backed credit card account, you should become aware of the potential risks. If a student defaults on their repayment, the bank may charge late fees and interest rates on the outstanding balance. Because a secured credit card has been set up with an FD, the bank might take back the security deposit in cases of severe default, which isn't necessarily conducive to teaching students to manage their finances through responsible credit Use.
Also Read: Credit Card Renewal & Replacement
When setting up UPI payments on an FD-backed card, it's essential for people to first understand the bank's terms. These terms often restrict the types of merchants from which you can purchase, LIMIT the amount of money available for purchase, and may further restrict purchases to specific merchants, such as grocery stores, gas stations, or fast-food restaurants.
If students are looking for clear explanations of credit-based payment systems, ZETAPP helps provide better tools for tracking payments, tracking balances, and tracking the long-term impact of credit choices.
The FD Secured Credit Card is usually secured by the Fixed Deposit; thus, proof of income is not required.
Timely repayments of an FD Secured Credit Card will positively affect your credit record.
Funds withdrawn via UPI will be added to your card balance. To access those funds, they will need to be paid back to your FD Secured Credit Card later.
Build and Maintain a 750+ Credit Score
