Spending money has become easier for investors with the new “Pay with Mutual Fund” facility.
This feature lets you make payments directly from your Liquid Mutual Fund using UPI. The required units are instantly redeemed, and the payment is completed almost immediately.
Currently, ICICI Prudential Mutual Fund and Bajaj Finserv AMC have introduced this service in partnership with Curie Money.
This makes liquid funds work like a bank account, but with the added advantage of market-linked returns.
If your fund house supports this feature, the payment amount will be deducted directly from your liquid fund and sent via UPI instantly.
It essentially allows your liquid mutual fund to function like a bank account while potentially earning higher returns.
Why This Feature Stands Out
Liquid funds invest in short-term money market instruments, which means your money is highly liquid and can be withdrawn anytime.
The “Pay with Mutual Fund” facility removes the need to first transfer money to a bank account before making payments.
Compared to savings accounts, which usually offer less than 4% annual interest, liquid funds currently provide around 6-7% returns.
So, your money can grow faster and still be available instantly for spending whenever needed.
Things to Keep in Mind
Check your fund’s average returns and redemption process before using this feature.
Tax treatment of liquid funds is similar to that of a bank fixed deposit or savings account.
Don’t rely on this entirely as an emergency fund; it’s good to keep some money in a regular savings account as well.
Be clear about how much money you want to use for payments while keeping your investment and liquidity needs in mind.
