SOURCE : NEW18 NEWS
Last Updated:May 20, 2025, 15:03 IST
Paying rent through a credit card can earn users valuable perks like cashback, reward points, and even help build a stronger credit profile.
Credit cards offer an interest-free period that can extend up to 50 days, giving renters a crucial buffer to manage their finances more efficiently.
In a country where UPI transactions have transformed everyday payments and smartphones double up as wallets, credit cards are now carving out a surprising new role; rent payments. India’s credit card usage has soared in recent years, with the number of active cards touching 10.98 crore in the financial year 2025, according to industry data. While plastic money is already a staple for online shopping and travel bookings, an increasing number of citizens are now swiping to pay their landlords.
What might seem like an unconventional method is gaining traction, and for good reason. Paying rent through a credit card doesn’t just defer cash outflow; it can also earn users valuable perks like cashback, reward points, and even help build a stronger credit profile. But as with any financial product, the key lies in understanding how to use it wisely.
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How It Works
To pay rent using a credit card, tenants must sign up on a digital platform that facilitates such transactions. Popular apps like CRED, PayZapp, and Freecharge offer seamless rent payment services, complete with reminders and reward options.
The process is relatively straightforward. After completing the mandatory Know Your Customer (KYC) formalities, users need to add their landlord’s bank details, including account number and IFSC code. Once the rent amount is entered, as specified in the rental agreement, a single click transfers the funds directly into the landlord’s account.
These platforms act as intermediaries, charging a processing fee that typically ranges from 0.9% to 2.5%, plus applicable GST. Despite this cost, users say the benefits, especially the ability to manage monthly budgets better, often outweigh the fees.
Credit cards offer an interest-free period that can extend up to 50 days, giving renters a crucial buffer to manage their finances more efficiently. For those juggling multiple monthly expenses or awaiting a salary credit, this delay can be a financial lifesaver.
There’s also the potential to improve one’s credit score, provided payments are made on time. Responsible usage reflects positively on credit reports, boosting the chances of loan approvals in the future.
However, experts caution that rent payments via credit cards aren’t always eligible for rewards. Several issuers either limit reward points or exclude rent payments from their cashback categories altogether. It’s essential to read the fine print before committing to a platform or card.
Moreover, excessive reliance on credit, especially if it leads to high credit utilisation, could harm rather than help one’s financial standing.
Before diving in, users are advised to carefully examine the following:
- Platform fees: Compare charges across different apps before signing up. What seems like a small percentage can add up significantly over time.
- Card terms: Not all credit cards treat rent payments equally. Some may offer benefits, while others might consider them as cash advances or neutral transactions.
- Repayment discipline: The interest-free window is a double-edged sword. Miss a payment, and the interest could erode any advantage gained.
As India moves closer to becoming a fully digital economy, innovations like rent payment through credit cards underscore how fintech is reshaping even the most traditional aspects of life.
- First Published:
May 20, 2025, 15:03 IST
