Nowadays one can swipe credit cards for literally everything. However, are you aware that one can pay house rent via credit cards too? Well, there are multiple options available that allows one to make house rent payment via credit cards.
Benefits of paying house rent via credit cards
- The obvious benefit of using credit cards for house rent payment is reward points. Let’s just assume that the credit card gives 1.5% reward rate and rent payment is 25,000/month. Thus the net reward earned would ~1% on the rent paid (adjusting for charges of service providers), which would be worth 3,000 (25000*12*1%) in one year. In case someone pays higher rent, the value would be higher.
- Further, not to forget the credit-free period. Assuming saving account interest rate of 4%, for an average 30 days credit-free period, one earns an extra 0.3% interest.
- Higher annual spending on credit card helps one to achieve annual spending limit to get an annual fee waiver or additional benefits (as in the case of HDFC’s Dinersclub cards or Amex Platinum Travel Card)
- Another aspect is that this helps in improving one’s credit score. Higher monthly bills and regular payments are seen positively by credit bureaus.
Best options to pay house rent via credit cards?
RedGiraffe.com has a service ‘RentPay’ that allows one to pay house rent via credit cards. RedGiraffe is a UK based fin-tech company that has set up shop in India.
RedGiraffe’s registration process is a bit cumbersome where one needs to submit all details, such as property owner’s names, PAN details (if rent is above a certain amount), bank account number etc along with tenant’s details. They may also for rent agreement for verification. The account activation takes a day or two. Once done, the tenant needs to set up auto payment with the credit card issuer. (My personal view is that RedGiraffe will ask for rent agreement details only for higher rentals. They did not ask me for rent of 25,000)
Though the process is a bit cumbersome, it is smooth and generally happens without any hassles. In addition, one needs to submit these details only once, so it is worth the efforts, I would say.
RedGiraffe charges 0.4%+ GST as charges on every house rent payment done via the credit card. However, for payment of 10,000 and below, a flat rate of INR 45 is applicable.
This is one area where RedGiraffe scores low. They have tie-ups with HDFC Bank, SBI, ICICI Bank, Kotak, Yes, Indusind, RBL and some other PSU banks. The inclusion of HDFC, ICICI and SBI would probably cater to nearly 80% of credit cards issued in India. However, if one has cards from Amex or Citibank then Red Giraffe service is not available.
RedGiraffe typically takes 2-3 days for the payment to reflect in property owner’s account. I.e. say one’s credit card is charged on 21st of the month; the property owner’s account will reflect the credit only by 23rd or 24th.
NoBroker.in is another service that allows one to pay house rent via credit cards.
Nobroker’s registration process is faster than RedGiraffe’s. There is no application processing time involved like in the case of RedGiraffe, as they don’t ask for rent agreement. Thus, one can make instant house rent payments using NoBroker.
NoBroker charges are higher than RedGiraffe. These charges rather take away majority benefits that accrue from making house rent payment via credit cards. Charges for NoBroker are as under.
|Up to INR 10,000||INR 99/transaction||1% on 10K payment, higher for payments below that.|
|INR 10,000-15,000||INR 149/transaction||1% for 15K transaction, could go up to 1.5% depending on rent payment|
|INR 15,000-50,000||1% of the rent amount|
|INR 50,001 and above||1.5% of the rent amount|
NoBroker accepts all major credit cards from Visa, Mastercard, Amex and Dinersclub. Therefore, it does not matter which bank has issued your credit card. Just swipe the card on NoBroker and pay the house rent.
NoBroker mentions payment would take up to 2 days. However, my experience is that payment happens almost instantly or on the same day.
Any other options?
Few more websites allow paying house rent via credit cards, however, for nearly all of them the charges are about 2%, which rather takes away all the benefits of paying house rent via credit cards.
- Paymatrix.in charges 2%+GST on credit card payments
- Payzak.com also charges 2% on credit card payments
- Paydeck.in levies 2.5% convenience fees
Which one do I use?
I prefer RedGiraffe. Simply because it has lower charges, plus it offers some cashback on SmartPay via HDFC cards. The quantum of reward points I earn on monthly rent payment more than offsets the 40bps charge that RedGiraffe levies. Nonetheless, I had been using NoBroker until very recently but moved away from it because of the 1% transaction charges and my Citibank card now classifies NoBroker has utility service provider and thus does not give me any reward points.
How to earn higher reward points?
Using credit cards that have spends based reward points, such as Yes First Preferred, HDFC Dinersclub Privilege and Black, Amex Platinum Travel, SBI Air India, SBI Air Vistara etc, one can achieve the spends based targets and become eligible for extra reward points or privileges.
What could be the downside?
- Firstly, the landlord may not agree to this arrangement. As payment is not received from the tenant’s bank account and the entry in the bank passbook comes as “RedGiraffe” or “Nobroker”. Thus the landlord may not be comfortable with the whole setup.
- In the case of autopay, one needs to vigilant to stop it when moving houses.
(Edit: I have written an updated post which includes my views on rent payment via Housing.com and Cred app. You can read that here.)
Have you paid house rent via credit card? Or if you have a question regarding it. Either way, let me know via the comment section below.