Should You Pay House Rent from Your Credit Card through Paytm?

paytmPaytm has launched a feature where you can pay your house rent using your credit card. Usually, we pay house rent through cheques or direct bank transfers. No credit involved. The credit card feature is interesting. From Paytm’s perspective, this feature makes good sense. House rent payment is one of the biggest monthly recurring payments. Therefore, it makes sense for Paytm to get customers to make rent payments from its app. Moreover, if the customers like this feature, it is easier to downsell other services that Paytm offers.

By the way, rent payment through credit card is not a novel feature. Websites/apps such as Red Giraffe, No Broker and CRED already offer such a facility. We have also written a post covering rent payment facilities from these websites. However, none of these websites/apps is even remotely as popular as Paytm.

How Do You Pay Rent through Paytm?

Once you log into the app, go to All Services > Recharge & Pay Bills > Rent Payment. You need to enter the account details of the owner. Thereafter, you can pay the rent through a credit card, debit card, net banking or UPI.

What Is the Benefit of Making Rent Payment through Paytm?

You can make payment through your credit card (among other modes). You get to enjoy an interest-free credit period for up to 45 days. Since the house rent is usually a big amount, you also stand to earn a good number of reward points. You can use these reward points for various freebies. You can expect Paytm to do a good job of putting in a reminder for rental payments too. Once you have set everything up, you can expect everything to be a breeze.

What Are the Disadvantages of Paying Rent through Paytm?

There is no free lunch here. Paytm will charge a convenience fee of 2 percent on credit card, debit card and net banking payments. GST shall be applicable on such convenience fee, taking the total cost to 2.36% of the rent.  Paytm does not keep the entire amount to itself. The fee shall be shared with your card issuing bank, network provider (Visa/Mastercard) and Paytm.

There will be no charge on UPI and Rupay debit card payments. Note, currently, when you transfer rent to the owner using your mobile banking app or net banking portal, you do not pay anything extra. Let’s see the difference between various instruments for rent payment.

Debit Card and Net Banking

If you use Paytm for rent payment and pay through debit card or net banking, you do not get any credit facility. The money is debited directly from your savings bank account.

Why would you want to pay an extra 2.36% by going the Paytm route? You can simply use your mobile banking app to pay rent. Will be as convenient as Paytm. You wouldn’t have to pay anything extra either.

UPI or Rupay Debit Card

Paytm does not charge anything for making rent payment through UPI or Rupay Debit card. So, there is no additional cost for you. In both the cases, your bank account gets debited. You do not get credit. Therefore, you can be indifferent between your mobile banking app (or any UPI app) and Paytm. In either case, you do not pay anything extra.

Credit Card

You cannot use your mobile banking app to transfer rent to the owner using your credit card. Not allowed. But you can pay rent from your credit card on Paytm. You get credit. Interest-free credit period. Reward points. But this credit comes at a cost of 2.36% of the rent amount. Note that this is not interest. This 2.36% is purely the transaction charge. Unavoidable for rent payments through credit card.

If your monthly rent is Rs 30,000 per month, you will pay Rs 708 extra.

I wouldn’t be comfortable paying 2.36% for interest-free credit period and reward points. However, there can be an instance when you are pressed for short-term cash. During such times (and I hope such instances are not frequent), you might want to use your credit card to pay house rent. Since a credit card comes into play for rent payment only in times of stress, remember you will have to square off the bill in the next few weeks. If you can’t, you will have to pay 3-3.5% per month on the outstanding amount.

What Should You Do?

Paytm offers convenience but not much greater from what your mobile banking app can offer, at least with respect to rent payments. If this convenience comes for free (UPI/Rupay debit cards), I do not mind using it. However, if there is a cost attached (debit card/ credit card/net banking), I wouldn’t be keen to use Paytm for rent payments. Credit cards should be used for rent payments only in extreme scenarios.

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