You can use it if your bank offers and you are eligible for the same.
With this, you can access pre-sanctioned credit lines, similar to an overdraft facility offered by banks.
To use this feature, banks must first obtain your consent to set up a credit line with a specified limit.
Once approved, you can spend the pre-sanctioned amount through UPI applications such as Google Pay, Paytm, MobiKwik, and mobile banking UPI applications.
You can then clear your dues later by the due date.
Some banks may charge interest on the amount used from the credit line, while others offer a credit-free period with no interest.
This feature can be a game-changer for you as it enables you to access credit facilities by linking the funding accounts to UPI, eliminating the need for physical credit cards or associated infrastructure like POS/swipe machines.
It levels the financial playing field by making digital credit more accessible.
Previously, you could link your savings accounts, overdraft accounts, prepaid wallets, and credit cards to the UPI system.
With this new feature, you can also link the pre-approved credit lines to make UPI transactions.
In the case of PayLater, you’ll pay interest only for the credit limit you utilise and for the number of days you use it and not on the entire amount, unlike loans.
No, you will not get charged for the UPI transaction and you do not have to pay any additional transaction charges for UPI transactions, according to HDFC Bank.
You will be charged simple interest basis the amount borrowed and for the number of days you use it.
Example: In case you use your PayLater account balance of Rs 5,000 for 10 days, then interest will be charged on Rs 5,000 for 10 days only.
This interest will be debited from the PayLater account at the end of the month.
Interest will be debited to your PayLater account on the last day of every month.
You need to deposit the interest amount in your PayLater account via online transfer.
In case, you have not paid the interest within three days (grace period), the bank will recover the same by deducting it from your primary account (Savings/ Current), HDFC Bank said.
Pre-approved limit will be available and it is up to your discretion whether to use it or not.
At the time of account activation, you will be charged a one-time non-refundable processing fee of Rs 199 + GST.
The processing fee will be deducted from your PayLater account.
To avoid interest charges, please maintain a sufficient balance in your PayLater account.
Please use net banking/mobile banking to transfer an equivalent amount to the PayLater account immediately to avoid any interest getting levied.
As of now, HDFC Bank has kept a limit of Rs 50,000.
There are benefits of the new feature.
Firstly, it reduces the number of physical cards you need to carry, streamlining the wallets and simplifying the financial lives.
Secondly, it facilitates transactions via UPI, reducing the time and effort required to secure loans and access credit.
However, if you use it, it's advisable to monitor transactions, make timely payments, and be mindful of your spending habits, experts say.