For an individual who does not have his own home, rent payment is one of the most difficult tasks to do. It is one of the highest expenses that an individual has to incur every month, and that too on time. With the effects of the Coronavirus pandemic, for some people, there may sometimes occur situations where an individual may find it difficult to pay the rent on time.
This is where credit cards come into existence. If you are very sure that you will be able to repay your credit card bills on time, credit cards can be beneficial in such a situation. They can come in very handy to handle all the cash flow problems that an individual faces. There exist various applications that offer great rewards and cashback deals while you pay rent via a specific application using a credit card. Hence, in this article, we are going to discuss the ways in which we can pay rent using a credit card.
Rent payment through credit card –People, for ages, were comfortable paying rent through various means such as NEFT, RTGS, IMPS, or even cash. Some people still prefer receiving rent in cash as the landlords are not comfortable sharing their bank account details with everybody. But after the COVID-19 Pandemic hit the world, cash transactions have reduced a lot, and people prefer using plastic currency for making all the transactions. Similarly, individuals who live in rented apartments have started paying rent through plastic currency, especially credit cards, as they get a lot of cashback and reward points while paying through their cards. But such types of transactions should be initiated through your credit cards only when you are quite confident about repaying the bill, which includes rent payment transactions, well in time and in full.
First, let us discuss in detail that what are the benefits that an individual will get if he pays rent using his credit card.
How to Pay Rent Using a Credit Card?
A credit card can effectively be used to transfer the rent payments from your account to the account of the landlord. You will have to use a rent pay application to earn better rewards and various vouchers on your rent payment transactions. You will also need to have the landlord’s account details to which the rent has to be transferred. Firstly, you will have to register for one of the rent payment applications. Then you have to provide all the details that they ask for, such as your details, the details of the residential property for which the rent has to be paid, credit card details, details of the landlord’s bank account, rent payment frequency, etc. After furnishing all such details, you can easily transfer the rent to the landlord’s account. Upon successful payment, both the tenant and the landlord will receive a payment confirmation receipt.
Popular Applications You Can Pay Rent With
Certain applications are specially designed to pay rent. These applications do charge some processing fees but offer great deals to the customer while paying rent through these applications using a credit card. The offers related to the rent payment keep on changing month over month.
- Red Giraffe – This application charges a processing fee of 0.39% + GST and requires the tenant to upload the rent agreement to initiate the rent payments. You can also earn RedGirraffe CASH Points while making rental payments through the apps.
- Freecharge – You can make your rental payments through Freecharge. Its convenience charges start from 0.9%.
- CRED – A processing fee between 1% and 1.5% is charged if you pay rent via the CRED application. This application accepts all Visa, MasterCard, American Express, and Diner’s Club credit cards.
- Magic Bricks – This application charges a processing fee of 1% to the amount of Rs. 75,000 and 1.5% above Rs. 75,000
- PhonePe – You can pay your rent with PhonePe. Select Rent Payments under the Recharge & Pay Bills section.
Why Should You Pay Rent Using a Credit Card?
Paying rent through a credit card certainly has some significant advantages. It proves to be beneficial for those customers who issues related to liquidity, especially by the end of the month. It is advantageous to those people who have to pay their house rent at an earlier date than the date on which they receive their salary. Additionally, the individuals also get benefits while they use their credit cards to pay rent.
When you transfer the rent using your credit card, you earn rewards on the basis of the amount you have used through your credit card. The reward points earned can be redeemed for various purposes, such as booking flights and hotels. In some cases, you may also earn shopping vouchers or discount coupons and exclusive offers of some premium brands while you pay rent using the rent transfer applications.
Can Help in Improving Your Credit Score
An unused credit limit can be used to improve an individual’s credit score. But that limit should not be used beyond 30% and should be used only if you are sure about repaying the bills. If you have any doubt about the repayment, your credit score will worsen instead of getting improved.
Rent paying applications such as Red Giraffe, MagicBricks, etc., save you from all the hassle of going to the bank and filling up forms and cheques for bill payments. These applications allow you to pay your card bills within seconds and with minimum formalities. You will be notified once the transaction is successfully completed. You can also set up a standing instruction with these applications, which means that the rent will be automatically transferred through your account on a date specified by the card owner. Also, this saves you from remembering the rent payment. In case an individual forgets the due date of the rent payment, the rent will be automatically transferred.
Paying rent through a credit card gives an added advantage to the individuals who have to pay the rent on the 3rd of every month but receive their salary on the 7th of every month. In this situation, credit cards help you to pay your rent well on time. And in case your credit card bill generation date is on the 15th of the month, the bill payment date will be around the 4th of the next month. Hence, in this way, you can effectively defer the rent payment by almost a month.
Helps in Achieving Milestones
Maximum credit cards these days come with milestone benefits, which means that the cardholder will get extra reward points or can save themselves from paying the renewal fee related to the credit card upon spending a particular amount using their credit card. Hence, the rent amount is a bulk amount and can easily help you in achieving your milestone spends every year.
Disadvantages of Paying Rent Via Credit Card
- The disadvantage of paying rent via credit card is that if you somehow missed paying the credit card dues on time, you would be charged a very high rate of interest, which is in the range of 30-40% per annum.
- Credit score depends on the debt you have to pay compared with the amount you can borrow. If your rent is too high, which is near your credit limit, your credit score may decrease instead of increasing as you may be hitting your credit limit.
We see quite good deals if we pay rent using a credit card, such as reward points, cashback, discount coupons, vouchers, etc. Various applications provide you with offers for paying credit card bills that are quite attractive. However, since credit card payments are quite high in amount, therefore credit cards should be used for bill payments only if you will be able to repay the amount within the due dates; otherwise, these transactions will affect your credit score adversely.