January 19, 2026 · 6 mins read
Santosh Kumar
The ability to utilise UPI (Unified Payments Interface) via a credit card backed by a fixed deposit (FD) has made life easier for customers. However, before you make your first purchase using your FD-backed credit card with UPI, it's essential to read through the terms and conditions to understand what additional fees may apply. For example, many people assume that because the credit card is backed by an FD, the cost of making a transaction with it through UPI would be less expensive or even free of additional charges. Unfortunately, in most instances, the cost of using UPI through an FD-backed credit card remains approximately the same as the cost of using a regular-credit-card transaction with UPI.
The payment made by a user to a merchant via UPI Transactions using a credit card will be recorded as a regular transaction. Consequently, when using UPI to pay for goods or services, your merchant won't typically charge you an additional fee for processing transactions from UPI. However, your merchant will incur a transaction fee when processing transactions from UPI; therefore, the transaction fee amount may influence how many merchants give you access to make purchases using a credit card with UPI, as well as which credit card platforms offer you the option of making purchases via an FD-backed credit card.
Interest rates are an important factor to consider when making a decision to use a secured credit card. If you are unable to pay your entire balance in full by the end of the due date, interest will continually be charged on the remaining amount. Generally, the interest rates of secured credit cards are the same as those of unsecured credit cards. Just because you have a fixed deposit with a bank does not mean that interest rates will be lower. It does reduce the risk for the bank, but it does not mean that it will reduce your costs to borrow money through a credit card.
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If you do not pay your bill by the due date, your account may incur late fees. Late payment fees continue to accumulate and can negatively impact your credit profile. In extreme situations where there has been a lack of payment, the bank may withdraw funds from your fixed deposit to recover the money owed. This fee is not a standard type of fee; however, it can be a serious consequence for the user.
Certain banks may limit UPI payments made with FD-backed credit cards. If you exceed these limits, your transaction may fail or be flagged for additional review before being processed. While this does not necessarily translate into a fee in the traditional sense, it does create friction and inconvenience for the consumer.
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Depending on a customer’s eligibility for rewards, this can also generate additional costs related to the payment processing for UPI transactions. Specifically, there are some credit card issuers that provide no rewards programs and no cashback for their UPI transactions. Although those UPI payment transaction fees may not be a separate charge for UPI transactions, they may influence a Cardholder’s overall benefits received from using the Card to make UPI payments, by potentially reducing the net dollar value obtained from UPI payments due to the transaction fee.
Also Read: What is UPI Collect?
Additionally, the fact that a Cardholder makes a UPI payment via a Credit Card does not fundamentally mean that funds are being transferred. For example, some credit card issuers treat cash as a currency and therefore allow cash to be loaded onto digital wallets via UPI payments. If a credit card issuer allows cash-like transactions and digitally loads cash to a wallet via UPI payments, those transactions are treated as cash advances. Most cash advances are subject to additional fees in addition to the immediate rates of interest, and cash advance transactions on a secured card are likely one of the highest-cost methods of using credit.
Although UPI and Credit Cards both offer security features such as fraud detection, these fundamental features are offered at no extra cost. Conversely, if you will require a specific service from the issuer (e.g. a dispute), those specialised services would incur additional fees, and the fee amount would vary depending on your financial institution.
Also Read: How to raise your credit score by 200 points
The clarity and simplicity of a platform offering credit-related products are very important while navigating through features related to credit. ZETAPP is an online platform that provides information and understanding on the various ways to utilise credit products and their associated costs, the way to repay and the importance of maintaining good financial habits. Knowing what fees will be incurred can help you make informed decisions and prevent you from incurring additional expenses.
In most cases, no. Although most credit card providers do not charge an additional fee for making a payment through UPI, the usual terms and conditions of credit card use will apply.
No. The fixed deposit provides you with security, however, the interest rate on any amounts owed on the card does not generally decrease because there is a fixed deposit in place.
Not necessarily. Most merchant payments will be treated as regular purchases. However, certain transactions may be treated as cash advances and, therefore, be subject to the associated fees.
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