If you are a HDFC credit card holder and use it to load funds from it to the bank’s PayZapp wallet, be prepared to pay charges from August 1. If a user adds money to her/his PayZapp wallet through credit card, then she/he will have to pay 1.5% of the amount transferred as fee plus additional GST (Goods and Services Tax) charges. This will work out to 1.77%. Currently, no charges are levied for such transactions.
The bank has, however, reduced the charges for transferring PayZapp wallet funds to bank accounts. Currently, a charge of 2.5% plus GST will have to be paid for moving funds from PayZapp wallet to the bank account. The bank has reduced it to 1% plus GST on such transactions from August 1.
The total charges from credit card to PayZapp wallet and then the bank account will work out to 2.95% of the value of the transaction from August 1. However, there will be no charges for transferring funds to the wallet from debit cards and UPI (Unified Payments Interface).
Many people put money in their PayZapp wallet using their credit cards. Since credit cards have a payment window of 30-45 days, it enables them to avail interest free funds for this timeframe. Wallets and third-party apps to which funds are transferred also offer a host of discounts and offers.
Customers now transfer the credit card money into the wallets and third-party apps as it does not attract any charges. They also do it to avail the benefits offered by these apps and wallets. But the practice is fraught with risks and was recently flagged by RBI (Reserve Bank of India). Following this, banks have started to take measures to make the practice unattractive by levying charges on such transactions.
“Personally, I would never advise to transfer a credit card balance to a bank account. Some card issuers may consider it as a misuse and can block the card," SpendWisely, an online platform that helps people to use their money smartly, posted on X (formerly Twitter). “There are some other risks also, like artificial overuse of credit cards which may exceed the earning of the individual etc.," it said.
HDFC Bank recently announced a slew of changes recently for credit card holders who make payments through third party apps such as CRED, PayTM, Mobikwik and Freecharge. The bank has levied a 1% charge on the value of rent payments using third party apps with the maximum fee capped at ₹3000 per transaction from August 1.
Educational expenses paid by credit card holders through third party apps will also attract a 1% levy. The maximum fee has been capped at ₹3000 per transaction for this as well. The recent revisions in fee and updated terms is aimed at curbing the appeal of using third party apps, especially for rent payments and meeting educational expenses. The new charges would make any benefits being offered by these third-party apps less attractive.
Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.