UPI credit line offers users a pre-approved credit limit that can be accessed directly via UPI. It functions like a small-scale digital credit card compatible with UPI, removing the necessity for a physical card and PoS terminal, as opposed to traditional credit card payments.
The primary goal of the UPI credit line is to enhance credit accessibility and promote financial inclusion, particularly for those who do not have access to traditional credit cards.
It is essentially a pre-approved sum from a bank accessible via UPI. It functions more like a personal loan than a revolving credit facility. After utilizing the credit line, interest begins to accumulate on the borrowed amount, and repayment must be made within a specified period, either as equated monthly installments (EMIs) or in full by the due date.
The interest rates and fees for UPI credit lines differ based on the issuing bank and the user's credit profile. Typically, these credit lines provide competitive rates similar to those of credit cards.
Repayment plans are adaptable, enabling customers to select their own repayment timelines. Payments can be made through EMIs or in a single lump sum. However, these are typically short-term loans that must be repaid within a period of 30 days to three months.
