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Are you Paying your Rent via Credit Card? Must Know this

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Credit cards are a financial tool that can be used for multiple purposes, including shopping, bill payments, groceries, and other needs.

Rent payment with credit cards was the latest addition to this list. This service was popularized by many platforms, including Cred and Paytm.

It allows users to pay their house rent with their credit cards. This service is available at a cost of 0.4 to 2% on most platforms.

The salaried class is responsible for major expenses such as house rent. This credit tool allows for quick payments and avoids ATM cash withdrawal hassles.

Credit card holders often pay their rent with this credit tool. This feature is also used by people who are short on cash.

To earn reward points, some people used their credit cards to pay rent. The reward points came at the cost of a service fee levied on the facilitator platforms such as Cred.

The banks also thought it was unfair that there wasn’t a way to verify that users were actually paying rent to landlords and not their family/friends, in order to convert the requested credit amount to cash.

The ICICI Bank now has a one percent charge provision to its credit card users who rent with the card.

Should you use credit cards to pay your house rent?

Experts recommend that you avoid paying rent with your credit cards. Experts say that rent should not be paid with credit cards because it is a fixed expense.

“House rent should be a regular, predictable expense that is not an unexpected one. House rent should be included in a monthly budget. Credit cards should be used in a responsible manner.

Credit cards are used to pay unexpected expenses, shop if cash is not available, to pay for fuel to earn rewards or cashback, and if the person is certain that they will be able make timely credit card payments.

A credit card can also be used to pay rent and earn rewards, but there are no other benefits.

Moreover, service providers and banks charge for this service so it is not worth using credit cards to pay rent.

You will need to make additional payments,” Pankaj Mathpal (Founder and Managing Director of Optima Money Managers Pvt. Ltd.

The biggest problem with using a credit card for house rent payments is the possibility of your credit rating being affected if you fail to pay the bill on time.

House rent is an expensive expense so you will have a higher credit utilization ratio if the card is used for other expenses.

Your credit score will plummet if your credit card usage ratio exceeds 30% of the credit limit.

A credit card user is entitled to an interest-free period, but if he or she misses a bill cycle, they will be charged a higher interest rate for the amount used.

It’s better to plan ahead and only use your income or salary to fund your house rental.

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