How to Use a Credit Card for NPS Scheme Payment

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National Pension System Scheme (NPS) is a voluntary retirement plan that helps its subscribers build savings for retirement and receive a monthly pension scheme when they are old. It allows them to have a continuous supply of money at the time they do not have an income. After opening an NPS Scheme account, investors must contribute some amount each month to accumulate wealth and earn compounding interest.

As credit cards are popular credit products that help people make payments instantly without paying upfront, many wonder if they can use a credit card for NPS payment. The good news is that they can make NPS payments with a credit card. The following post will explain how to make these payments.

An Overview of the National Pension System Scheme

NPS Scheme is a retirement planning program that lets individuals contribute small portions of their income to build a corpus and secure their retirement over time. It is a long-term voluntary scheme regulated by the central government and the PFRDA (Pension Fund Regulatory and Development Authority).

The government launched the scheme in 2004 for government employees only, except for the armed forces. However, in 2009, it opened to all Indian citizens between 18 and 70 years of age, including individuals and private and public sector employees.

National Pension System Scheme is a safe and structured platform that lets subscribers invest systematically and inculcate the habit of saving from a young age. Upon retirement, the subscriber can withdraw up to 60% of the accumulated corpus in a lump sum and invest the remaining 40% in an annuity to generate a monthly pension for life.

NPS investments offer tax benefits under various sections of the Income Tax Act. All in all, the scheme provides stable income to the investors after retirement and helps them save taxes at present.

Can Investors Use a Credit Card for NPS Payment?

Managed by many ICICI Bank (Pension Fund Managers), ASPs (Assurance Service Providers), NPS allows contributions through various methods for easy accessibility and convenience. However, credit cards are allowed only for Tier I accounts and not for Tier II accounts.

How to Use a Credit Card for NPS Payment?

As mentioned earlier, subscribers can only use a credit card for Tier I account contributions only. This facility is not available for Tier II account holders. These are the steps to follow:

1. 1. The first step is to register for a Tier I and tier II NPS account by visiting the ICICI Bank website and submitting PAN, Aadhaar, bank account, and other details necessary for registration.
2. 2. After successfully creating a Tier I and Tier II NPS account, the subscriber receives a Permanent Retirement Account Number or

ICICI iMobile Pay App

1. 1. Open/ Log in to the ICICI Bank iMobile Pay app.
2. 2. Once logged in, Click on the "Invest and Insure" on the top app drawer option/section.
3. 3. Find and Click on the ‘PPF/NPS/Gold Bond/Pension’ feature and then Select "Instant NPS" to view NPS Portfolio & Contribution.
4. 4. Click on “Make Contribution”
5. 5. Select Tier I or Tier II account for contribution
6. 6. Select Credit Card in payments Option
7. 7. Enter: Amount & Schedule payment as One time or Recurring and confirm Payment
8. 8. Transaction will be processed in 2 working days and will reflect in NPS account in 4 working days

ICICI Net Banking

There are several methods to make NPS contributions on ICICI:

1. 1. Open/ Log in to the ICICI Bank Net Banking.
2. 2.Once logged in, Click on the "Invest and Insure" on the top app drawer option/section.
3. 3. Find and Click on the ‘PPF/NPS/Gold Bond/Pension’ feature and then
4. 4. Select "Instant NPS" and select your NPS Scheme account & Click to view National Pension System Scheme Portfolio & Contribution.
5. 5. Click on “Make Contribution”
6. 6. Select Tier I or Tier II account for contribution
7. 7. Select Credit Card in payments Option
8. 8. Enter: Amount & Schedule payment as One time or Recurring and confirm Payment
9. 9. Transaction will be processed in 2 working days and will reflect in NPS account in 4 working days

Important: Ensure your first NPS contribution online within 45 days of receiving your PRAN (Permanent Retirement Account Number) to avoid account freezing.

After completing the above steps, the contribution will be reflected in the NPS account after 2 days.

Pros and Cons of Using a Credit Card for NPS Payment

Let’s look at the pros and cons of using a credit card for NPS payment:

Pros:

• Contributing to NPS via credit card increases the card’s usage, making the subscriber eligible for greater cashback and
• When running short of funds, account holders can continue their NPS contributions without paying the cost upfront.
• Higher NPS contributions using credit cards provide maximum tax deductions to reduce tax

Cons:

• Not paying the credit card bill on time makes the contribution costlier due to interest

Using a credit card for NPS payment is perfect for maintaining consistency in NPS contributions, even during financial shortfalls. However, repaying credit card bills on time is essential to avoid high interest rates and late payment charges. Each NPS contribution secures financial stability for the second innings of life.

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