Rent via credit card: If you get reward points, cashback and 45 days relief if you pay the rent of the house every month, then how will it be? Many people are very fond of this thing. This is the reason that with the increasing trend of digital payments in India, now a new trend is gaining momentum, paying rent with credit card.
The desire to better manage the convenience, profit and cash flow has turned millions of tenants towards this option. But there are some hidden fees and rules behind this smart option, which may be overwhelming to ignore.
Let us know how to pay rent from credit card, what are the things and whether this method is right for you or not.
How to pay rent with credit card?
There are several digital platforms in the market to pay the rent from the credit card. Such as Cred, Payzapp, Freecharge, Redgiraffe, Nobroker. It is quite easy to use them, but you have to follow some special process.
- Choose platform: First choose a trusted platform that provides this feature safely.
- Do KYC: After signing up, KYC (Know Your Customer) process has to be completed. This ensures compliance of RBI guidelines.
- Landlord’s details: Enter details like the landlord’s name, bank account number and IFSC code and add them as ‘Beneficiary’.
- Fill the rent amount: Fill the correct amount according to your rent agreement and submit for payment.
- pay with credit card: Complete the payment process by selecting credit cards. During this period, processing fees and GST are applied between 1% to 3%.
Benefits of giving rent with credit card?
The option to rent with credit card is quite useful. If you have a shortage of cash in a month, then the interest-free period of 45–50 days of credit card can provide relief. With this, you can handle the necessary work like paying the rent of the house or giving tuition fees. Digital platforms facilitate reminders and trekking. This does not cause problems like delay or lapse in paying the bill.
What should be kept in mind?
Credit card can prove to be a very useful option to pay rent or tuition fees. However, there are some disadvantages of its use, which you should take care of.
- Processing fees: Platforms such as Cred and Freecharge charge 0.9% to 2.5% fees + GST. This amount is based on total rent, so it can become a burden on large amounts.
- Limit of reward rules: Not all credit card companies offer rewards on rent payment. Some place it in the ‘inroisible category’. Therefore, it is necessary to read the card terms and conditions.
- Impact on credit score: If you pay the rent with credit card every month, a large part of the total limit can be used. This increases your credit utilization ratio, which can negatively impact the credit score.
- Regulatory aspect: The RBI has not yet imposed any direct ban on P2P transactions (eg fare) with credit cards. But some banks or platforms may red-plat such transactions. Especially, if a large amount of money is being transferred again and again.
Is it beneficial to pay rent from credit card?
This method can be helpful in financial planning for some time, especially when you do not have cash immediately. But this option is better only when you can pay the card on time. If the payment is delayed, the interest rates of the credit card (20–40% per annum) can become a heavy burden.
If you have a habit of paying on time, and keep your credit limit balanced, this method can be beneficial for rewards and cash flow management. But lack of discipline, fees burden and increased debt can also make it harmful. In such a situation, the balance of both advantage and risk is necessary before taking this decision.
Also read: Why expiry date occurs in credit card, what is the meaning of CVV? Know every detail