January 20, 2026 · 5 mins read
Santosh Kumar
Users holding credit cards backed by Fixed Deposits (FDs) have questions as to whether their UPI (Unified Payments Interface) transactions will earn rewards just like normal transactions performed with the use of a credit card. Many users think that because they are secured by an FD, the benefits may not be as great or might differ.
However, under most circumstances, credit cards backed by an FD work the same way as unsecured credit cards in terms of how they can be used (including UPI-enabled payments). That said, the only way to determine if you will earn rewards for UPI payments is by checking the terms set by the issuer.
You can earn rewards for UPI spending with your FD credit card, although that is not always guaranteed. Specifically, whether you receive points, cash back, or something else for your UPI payments relies entirely on how your issuer categorises those payments. In particular, some banks consider UPI credit card payments as normal retail purchases and, therefore, eligible for earning rewards, while others may exclude such transactions from reward programmes altogether or award lower earning rates.
Having a fixed deposit with a bank doesn't impact the structure of rewards on your card or account. A fixed deposit acts as security for the bank to reduce its risk of loss, but it does not automatically make transactions on cards more rewarding. Reward rules depend upon the type of credit card used, the network used, and the issuer of the card and not on whether or not the card is secured by a fixed deposit.
Some issuers may reward only certain categories of spending, such as retail purchases, but not reward for cash-like or quasi-cash transactions. In many cases, UPI payments are placed into restricted categories based on how merchants code their transactions and could therefore not qualify for rewards even when the transaction is approved to complete.
Customers should be aware that even if a reward applies to them when using UPI, the amount of points received can very well be less than what they would otherwise receive for using their card in person or online. This is due to the lower fees associated with the UPI method of payment, causing banks to reduce the amount of reward points earned. Although this does not impact your ability to use the UPI payment, it certainly impacts what you get back in terms of value for having used it.
Also Read: How to Apply for a ₹2,000 FD Credit Card on ZET App: A Step-by-Step Guide?
While the availability of rewards is an incentive for the usage of a product, it should not be a primary consideration for using credit - if the rewards do not exceed the costs of interest and/or late fees when making late or missed payments on carried balances, then you would be better off without the rewards program, regardless of the issuance.
FD-backed cards also fall within this category. A fixed deposit will not exempt you from paying interest on any outstanding amounts due on your card.
In terms of building a credit profile, UPI transactions on FD-backed cards provide an opportunity to create an established repayment history as long as payments are prompt. The most valuable benefit is to those who have limited credit exposure.
Also Read: Can Students Get a ₹2,000 FD Credit Card? A Complete Guide
Because of the differing reward policies among card issuers, it is best to review the terms and conditions of your card. Most issuers provide clear language outlining which types of UPI transactions are eligible for rewards and under what conditions. Thus, by remaining aware of these policies and the avenues to earn rewards, customers will not have a false expectation of earning rewards.
Understanding how credit features and the benefits of those features work is the key to navigating through all the options available for Credit-Based Products. ZETAPP is a credit platform that provides a more straightforward way for users to use such products; they are also able to track the patterns of how their usage, costs, and overall financial impact of those products will affect them in the long run.
Also Read: How a ₹2,000 FD Credit Card Helps Build Your CIBIL Score Fast
Do all FD-backed credit cards offer rewards on UPI spending?
No, the issuer determines whether or not UPI transactions are included in their rewards program.
Does the fixed deposit affect how many rewards I earn?
No, A fixed deposit only serves as collateral and does not have any effect on the reward rate or whether or not I qualify for a reward.
Can rewards offset the cost of interest or late fees?
No, rewards are typically nominal amounts in comparison to interest charges. You should always repay loans in a timely manner to avoid losing money.
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