House rent is one of the biggest non-discretionary expense in the monthly budget. How do you pay house rent? NEFT/IMPS transfer? Cheque? Cash? I believe, if you are reading this article, you are likely transferring rent directly to the owner’s bank account. Or you already own a house and there is no need to pay rent.
Have you thought of transferring rent using your credit card? You might ask, how is that possible? A few Fintech companies are now providing this option. There are at least three entities NoBroker, RedGirraffe and CRED that now provide you the option to pay your house rent using a credit card.
What Are the Benefits of Using a Credit Card to Pay House Rent?
You spend more on your credit card. House rent is a big ticket spend. That means more rewards/cashbacks/discounts from the banks. If your credit card requires minimum spends, this could be a good way to reach those thresholds. Do note, if your credit card usage is too high (compared to card limit), then your credit score can suffer.
You get an interest-free credit period. Assuming you get a 45-day interest-free credit period and monthly rent is Rs 30,000. You can invest Rs 30,000 in a fixed deposit or a liquid fund and say earn 6% per annum. Over 45 days, you will earn Rs 221. Over the year, that makes it Rs 2,663. Neat saving.
How Do I Pay Using House Rent Using a Credit Card?
Different apps or websites may have different requirements. You will need to provide your credit card details and your landlord’s bank account details for sure.
- On NoBroker, you just need to enter your details and the landlord contact bank account details. You will have to make the payment manually every month. You cannot set up Auto-pay.
- With RedGirraffe, the process is a bit complicated. You first need to register on the website. In addition to owner’s contact and bank details, you will have to upload a rental agreement too. After this, RedGirraffe id(RG-ID) is issued to you, you need to register this with your bank. This is to set-up Auto-pay for monthly rent payments. For one-time payments, I think this entire set up should not be required.
- On CRED too, you just need the owner’s bank account details. There is no auto-pay facility available currently. By the way, on CRED, you will earn reward points as well (different from credit card rewards) for the rent payment. You can also pay your credit card bill through CRED and earn CRED coins. You can use these coins to buy products and services from CRED brand partners. I can’t comment if these coins are really useful.
Author’s Note: I have not registered on any of these platforms and tried to make any payment. I have relied on information on various online resources to understand the process.
Should You Pay Your House Rent Using Your Credit Card?
In my opinion, paying rent through a credit card is not a good idea. Why? We must accept that the facilitator (CRED, NoBroker, RentPay) must be compensated for providing this service. Hence, you pay extra.
- RentPay from RedGiraffe charges Rs 39 plus GST for every Rs 10,000 of rent. Therefore, if your monthly rent is Rs 30,000, you will pay Rs 117 (Rs 138 including GST).
- NoBroker charges 1% of the rent amount. Therefore, you will have to bear an additional Rs 354 (incl GST) on monthly rent of Rs 30,000.
- CRED charges 1-1.75% of the transaction value depending upon your credit card network. So, if your rent is 30,000, you will have to shell out Rs 300-450 to CRED to avail this service. I don’t know if this charge includes GST or not.
You pay extra but you get extra reward points. Don’t be enticed by lure of extra credit card reward points. For the most of us, these points won’t be worth the extra cost incurred. At the same time, depending on your spend patterns and the card you hold, you may find it worthwhile to shell out extra money to get the most out of your credit card rewards. You will have to weigh the cost against the benefits received.
By the way, there can be certain practical issues in using a credit card to pay the rent. You might want to take consent from the landlord / owner about uploading a bank account and contact details to a third-party website. Not everybody may agree.
And yes, if you are shifting to another house, don’t forget to cancel the instruction on your credit card.
- How to Use Credit Card Reward Points Smartly?
- Hoarding Credit Card Reward Points May Not Be a Good Idea
- NoBroker: RentPay: How it works/FAQs
- RedGirraffe-HDFC Credit Card: Pay Rent Online
- LiveMint: Article on paying rent by credit card