You Can No Longer Use Credit Card To Make Contributions in NPS Tier-II Accounts
Moneylife Digital Team 04 August 2022
The Pension Fund Regulatory and Development Authority (PFRDA) has decided to stop accepting payment of subscriptions/contributions by using credit cards as a mode of payment in the National Pension System (NPS) Tier-II account. The regulator has instructed all points of presence (PoPs) to immediately stop accepting credit cards for payments to NPS Tier-II accounts.
In a circular dated 3 August 2022, the PFRDA said, “The Authority has decided to stop the facility of payment of subscriptions/contributions using credit card as a mode of payment in the Tier-II account of NPS. Accordingly, all PoPs are advised to stop the acceptance of credit card as a mode of payment for the Tier-II account of NPS with immediate effect.”
The regulator said it has taken the decision to stop the use of credit cards in NPS Tier-II accounts in the exercise of the powers conferred under Section 14 of Pension Fund Regulatory and Development Authority Act 2013 “to protect the interests of subscribers and to regulate, promote and ensure orderly growth of the national Pension System and pension schemes to which the Act applies.”
NPS has been the only saving instrument that allowed account-holders to invest using their credit cards through the eNPS portal. While the credit card payment facility is still available for the NPS Tier-I account, you cannot make a contribution to the NPS Tier-II account using your credit card.
The usage of credit cards for payments to investment scheme such as mutual funds or stocks, etc, are generally not encouraged due to fear of over-leveraging on high-interest money. Credit card users have to pay 0.60% (excluding GST—goods and services tax) as a payment gateway charge for contributing to NPS with a credit card through net banking.
NPS Tier-II account is a voluntary account that a subscriber can open if s/he has an NPS Tier-I account. The Tier-II account has flexible withdrawal and exit rules. Also, contributions to the NPS Tier-II account don’t qualify for any tax exemptions.
10 months ago
The gov might have observed one more transcation trend. One uses credit card to buy NPS-tier-2 units at the start of the credit card billing cycle. Then withdraw from NPS-2 account to savings account. This way one gets cash in hand for about 35 days (till credit card payment date) or can opt to pay later etc. Also credit card companies pay reward points as well. So one use this way and get some profits if done rightly etc.
10 months ago
Govt has been saying that the gateways charges will be removed for debit and credit card transactions but it is only on lips and not implemented since if one books a ticket in bus or train charges are levied as convenience fees.When will the govt walk the talk
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