Credit has been an essential part of every modern financial management system, and the two options that dominate this are UPI credit and credit cards. While they offer convenience and flexibility, both differ in accessibility and benefits. The introduction of UPI credit in the new UPI payment app is changing the way people used to access short-term credits. But does it offer more benefits than credit cards? Let’s compare both options and help you decide.
What is UPI Credit?
A credit line on UPI, or UPI credit, is a credit limit that is pre-approved by the financial institution or your bank, allowing users access to funds without the need for their bank balance. Here, you apply for UPI credit through your bank, and if it is approved, the credit line is linked to your UPI ID, and you can use it to make payments using UPI on wallet.
What is a Credit Card?
A credit card is one of the most used financial tools that lets users borrow money whenever needed, up to a pre-approved limit. It offers various discounts, exclusive deals and reward points to users. Users can conveniently make big purchases with their credit cards and pay the sum later through EMIs. A credit card functions separately, where the users pay the monthly bill, and late payments even affect their credit score negatively.
Key Differences Between UPI Credit and Credit Cards
Let’s explore how credit lines on UPI and credit cards are different from each other:
- Approval Process: UPI credit is approved quickly on UPI on wallet-linked bank account, whereas credit cards application takes time to process as they require your CIBIL scores and approval from the bank.
- How it Works: In UPI, credit money is borrowed from the UPI-linked bank account. On the other hand, users can make purchases using credit cards.
- Purpose: UPI credit can be used for short-term day-to-day expenses, and credit cards are generally used for many big payments.
- Ease of Use: Credit lines on UPI get seamlessly integrated with the new UPI payment app, and there is no need for physical cards. On the other hand, a credit card requires swiping and entering the OTPs of the card.
- Limitations: UPI credit may incur daily and per-transaction fees, while in credit cards, users can spend a sum up to their pre-approved credit limit.
- Rewards and Benefits: Credit cards provide cashback, exclusive rewards, and offers on every use, but UPI credit may not have that.
Which One Should You Choose?
UPI credit is a better choice for you if:
- You are looking for credit for small-scale, daily transactions.
- You want instant credit and don’t want to go through a lengthy approval process.
- You want to pay less to no interest on the credit.
- You prefer making instant payments using your UPI Lite payment app.
You can choose to apply for a credit card:
- You are looking to make big payments like purchasing gadgets and electronics using the card.
- You want to receive exclusive rewards, cashback and offers on your purchases.
- You are comfortable managing your finances by making fixed monthly payments.
- You plan to use EMI for big purchases.
Final Thoughts
Both UPI credit and credit cards are great financing options; it just depends on the user’s purpose. With the right platform, you can conveniently use them efficiently and avoid unnecessary debts.
Trusted online platforms like Bajaj Finserv are both UPI on wallet and credit card application apps. After analysing their requirements, users can conveniently and securely apply and make the most of it. So, whether you choose UPI credit or a credit card, make sure you manage your finances efficiently.
