Buying MF with credit Card

So just today i saw that i can add my credit card in my Gpay too :slight_smile:
I don’t use UPI a lot :slight_smile:
here’s a situation (not hypothetical) and i would love to hear from you guys about it
i have HDFC Millenia Credit card limit of Rs. 1L so would there be any charges if i was to buy ultra short debt MFs worth 28k keeping my credit utilization <30% and pay the card in full on due date, is it like creating a infinite 50-45day free interest glitch with very low to negligible risk?
And to take things a bit more risky i can further more pledge these MF units to get margin and trade with that?
Can i do something like this?

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Do check with the Bank who has issued the credit card if there is interest charged if you do this transaction i.e buying MF from the card. The Bank issuing the card, can distinguish between genuine purchase of goods as against buying MF etc. So better check with the bank before purchasing, if not, you will be charged interest from the date of the transaction.

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Okay say i have 2 different upi ids linked 2 different savings accounts and then i use credit to pay one of the bank accounts and then use that account to buy the mf :slight_smile: i bit indirect but is it possible or anyone who has ever done it?

If you are trying to transfer funds from your credit card to your bank account the interest rate will be very high plus there will be a processing charges. For any such transfer, interest will accrue from the date of the transaction. It is just not viable.

I did a search on your first query and it seems you are not allowed to use credit card for buying MF and you need to route it through a bank account.


Althought the idea is great. There is a small issue. According to SEBI any investments made should be from the registered bank account with the broker. so Ideally your transaction should get rejected by default. Have u tried adding funds to broker account from an unlinked bank account, the transaction went through from bank but got rejected by broker and got refunded.

in short in case of CC the broker cant verify the bank account so the transaction should fail.

But for some reason NPS payment gateway allows CC but charges some 0.55% as payment gateway fee.


Thanks for the wonderful insights @neha1101 @ranton137 :slight_smile:
I did verify it from the CC company and it might only be possible if i add the funds to another back account via UPI but then the said account would be liable to pay standard merchant charges to the bank and the entire process would be a complex web :slight_smile:

Yes. The attached article which I had posted in my earlier post says the same thing. CC can be used to buy NPS. This could be an exeption.

Yeah, I use CC to invest in NPS…

Could you describe the entire procedure a bit?
like how exactly you use your CC to invest in NPS.

I use CRA to invest in NPS and most likely CC wont work on POP mode. so in CRA when you are making payment the payment gateway options are either billdesk or Razorpay and both provide CC as payment option. its like any other platform payment only in the drop down select Card and enter CC details.

As mentioned earlier there are charges associated with it like 0.55 to 0.75% + GST. so net rewards might not help much but it does help me in terms of some 30-40 day interest free loan.

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It seems you can use cc only for Tier 1 account. eNPS site says the following

As per PFRDA guidelines, contribution payment in NPS Tier II A/c through Credit Card is not permitted. Use other modes of payment such as Net Banking/ Debit Card / UPI for contributing in Tier II

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Credit card account of upi can only be used for merchant payments. No P2P, no MF.
Also note that currently only Rupay credit card can be linked to upi

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The credit card you are adding to Gpay will only work for NFC tap & pay transactions.

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Ohh that’s new to me too
:slight_smile: Thanks @ANKIT_T

Can’t i scan and pay ?

check if you get a payment selection from credit card when scanning qr.

i never got it. meanwhile the tap and pay via nfc is awesome. no need to carry the actual wallet to shops

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Whether it allows or not is secondary. The terms of a credit card clearly disallows investments. So if you are doing it, then it’s illegal. You have agreed to these terms and conditions at the time of taking the credit card.
If you stab a person with a knife you can kill him. But that doesn’t make it legal.


True words @Jason_Castelino :slight_smile:

On official govt NPS T1 platform CC is available as payment option. Not sure how can u call it illegal. And also its the duty of regulator to ensure middle man follow the regulations.

This is from axis bank cardholder agreement. Please refer point 7.2.
Though there is no mention of investments, NPS is clearly not a product nor a service for personal or official use. Also, there is some financial gain coming out of this.

This is the way I interpret it and there is a very good possibility that I am totally wrong.

Just because it is available you can’t avail it. When we take business loan, we give a declaration that it will be only only for business. It is available for diversification and one can even use it for FNO trading or buying some shares which he knows will beat loan interest rate. We can transfer from one account to another. It may not even come to the notice of the banker. But doing so will be considered as breach of terms.

Yes. There are a lot of loopholes.
I used to use Bharatpe POS loophole for almost a year when they had no MDR charges.
I used to swipe my own card in my business, transfer that to my SB account, earn interest and also earn credit card points. Was doing it for almost 20lakhs per month. So you can imagine the arbitrage gain I made out of this. Having done this I know that is also not allowed.

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