Credit card will not be able to be paid in Tier-2 accounts
The closure of credit card payments in Tier-2 NPS account is given through a circular. PFRDA has stated in the circular that credit cards cannot be used as a mode of payment in the Tier-II account of NPS. PFRDA is empowered to amend the rules under Section 14 of the Pension Fund Regulatory and Development Authority Act, 2013. The Authority has taken this step to protect the interest of the customers.
Why was the decision taken
Actually, the use of credit cards to invest in mutual funds or stocks is not encouraged. Paying by credit card has to pay more interest. NPA account holders have to pay gateway fee of 0.60 per cent for making credit card payments, after gateway charges, it becomes higher when we add GST to it.
What is Tier-2 Account
NPS Tier-2 is a non-retirement account. This account can be invested by private sector employees, individuals doing their own business or businessmen. The specialty of this account is that you can withdraw money without any penalty or lock-in. There is no minimum balance amount or minimum annual contribution for NPS Tier 2 account. National Pension Scheme account holders having Tier-2 account do not claim income tax exemption on investments made in the account. However, the rules for withdrawal of investments deposited in Tier-2 NPS account are not as strict as compared to Tier-1 NPS account. Anyone can open a Tier 2 account.