Can monthly rent be paid using credit card? Is it worth it?
The rent-payment day is my favourite time of the month, said no one ever! It usually is the most significant chunk of an individual’s monthly expenditure, and I always wondered if there was any way I could pay it through credit card & earn rewards on it.
How to pay rent through credit card?
There are a couple of companies who are offering this service in India. Simply sign up using your google account or by manually adding the details. Add your credit card details along with your landlord’s bank account details. Mention the amount you need to pay & you are all set.
The process is similar for all the companies offering to pay rent through credit card. Listing the five companies that you can use to pay your rent through credit card along with their fees & perks.
RedGiraffe has the lowest fee for payments for rents up to Rs. 32000; above which it is wiser to pay through NoBroker platform.
RedGiraffe, however, is a little more reliable than NoBroker & has been consistent in making timely payouts to the landlords. NoBroker takes up to 4 days to credit it to the landlords’ account.
Also, RedGiraffe has a recurring payment module where you can provide standing instructions or avail auto payment wherein every month on the due amount will get deducted automatically without any manual intervention. No broker hasn’t built that feature as yet & hence you will have to do it manually on their platform every month.
Alternatively, if you have a debit card that gives high rewards consider paying through it.
What are the benefits?
Credit Free Period: You do not have to worry about paying back immediately, most banks offer 30 to 45 days credit free period.
Earn reward points on your card: You earn reward points on every penny you spend & that’s one of the major reason why most people prefer using a credit card to pay their house rent
Cashback Offers: A couple of banks & service providers like Pay Matrix also provides cashback on every transaction.
Increase Credit Worthiness: This is only valid if you do pay up your dues in time. Paying off the credit card within the deadline helps you increase your credit score & worthiness. By the way, if you thought paying credit cards bill should be rewarding too then read about the app that rewards people for paying their bills on time.
Earn Interest: This is an alternate approach. You can use your salary for investments or simply let it be in the savings account & you will also earn interest on it. Most banks offer a minimum 4% interest on savings. Some banks offer 6-7% interest on the savings.
Renewal Fee Waiver: One of the biggest monthly expense that most people incur is the house rent & if you could pay it using a credit card, then you don’t have to splurge unnecessarily maintain the minimum spends. Helps you to reach your minimum spends amount faster thereby helping you to save on renewal fee.
Save On Your Home Loan: A person with good credit score can save up to Rs 1 lac annually on their home loans as the banks usually offer you lower interest than the rates prevailing in the market.
How to decide?
To determine whether it is worth it to pay through the credit card, just compare the value of the reward points that you would earn vis-a-vis the fee that you are paying.
For instance, if you have an HDFC Regalia Credit Card, you will earn 4 reward point on every Rs. 150 spent.
So, for a rent of Rs 25000, you are paying Rs. 92-99 depending on the platform you choose, you will end up receiving around 667 points (not considering any bonus).
The value of every HDFC’s Regalia credit card reward point is equivalent to Re 0.50 in cash, and you are literally getting Rs 333 in cash.
The net benefit is of Rs. 234 (Rs 333 - Rs 99) on every single transaction and that’s what makes it completely worth it!
Is there a reason not to pay rent with a credit card? If you do not have money & also do not foresee yourself having it anytime soon, it’s wiser to loan it from your family & friends instead of putting the tab on the credit card. Not only you will fall in the vicious spiral of non-payment but the finance charges are also pretty high & you would end up losing a lot of money in exchange of rewards.
Not only this, the impending dues will the amount of credit you can borrow & will reduce your credit score.