Paying rent via credit cards may not be a good idea any more — here's why

Paying rents via credit cards may no more remain that rewarding as card issuers have started putting restrictions on such payments to prevent misuse. SBI Card, HDFC Bank, ICICI Bank and Yes Bank have come up with new rules on their credit cards for rent payments.

ICICI Bank credit card customers will have to pay 1 percent charge as a fee for paying rents from October 20, 2022. It is meant for cardholders who use their credit cards to pay house rent through platforms like Cred, RedGiraffe, Mygate, Paytm and Magicbricks, among others.

So far, no fee was being levied by any bank or credit card company on such transactions. ICICI Bank will be the first to introduce a fee on rent payments done through its credit cards.

HDFC Bank, on the other hand, has limited reward points from rent payments at 500 points, while Yes Bank has limited such transactions to twice a month.

SBI Card will also reportedly levy a processing fee of Rs 99 (exclusive of taxes) on rent payments from November 15.

Rent payments are one of the highest expenses individuals may incur in a month. At certain times, people may find it difficult to pay the rent on time. Under such circumstances, the rent can be paid by using credit cards. However, after the new rules come into effect, cardholders may face some difficulty.

Factors to consider while paying rent via credit cards

Impact on credit score

Since the credit utilisation is increased by paying the rent with credit score, this may have an impact on the credit score.

Interest rate

In case the credit card bill is not paid in full, interest is levied on the outstanding balance. The interest that is levied piles up over a period of time.

Processing fee

Banks generally charge a processing fee in case the rent payment is made via a credit card. Hence, consumers end up paying a higher amount.