Many people still exclaim after hearing that I do my rental payment using credit cards and earn handsome rewards by doing so. Well, earlier no one would have thought that this would be possible someday. But RedGirrafe made it possible for the very first time in India in 2017 and is still the popular choice of many users owing to its one of the lowest convenience fees.
Nowadays other than rent you can pay school fees, maintenance charges and even brokerage from such applications. Club the best portals with the Best Credit Cards For Rental Payments.
Well, before figuring out all the available portals and what they charge first let’s look into the pros and cons of rental payment using credit cards.
Advantages
- It provides an interest-free credit period of up to 45 days and thus helps you with liquidity at times.
- It helps you achieve milestones and other rewards offered by your credit card issuer.
- Users can also set standing instructions and not miss the due date besides getting digital rent receipts.
- With the increased usage of your credit limit, you get to improve your credit history if you pay bills on time.
- And since you spend more on your card you may get a spends-based annual fee waiver or an upgrade to your dream card.
Disadvantages
- A high credit utilization ratio can negatively impact your credit score especially if you have a low credit limit.
- Since rent is a significant expense, you may not be able to pay the complete bill on time, and the issuer will charge you heavy penalties and interest which will hamper your credit score like anything.
- Credit card issuers can apply extra charges as ICICI Bank and SBI Cards have recently started levying charges on rent payments.
As you can see that the number of disadvantages is very few as compared to the advantages. Hence, it makes a lot of sense to put this expense on your credit card especially if you are financially disciplined.
Rent Payment Platforms
| Platform | Net Charges* | Rent Agreement Required | Card Acceptance |
| RedGiraffe | 0.46% | Yes | All, except AMEX |
| MagicBricks | 0% to 1.76% | Yes for 0% fees | All, except AMEX |
| 99Acres | 1.17% | No | All, except Diners |
| NoBroker | 1.3% | Optional | All, except AMEX |
| Freecharge | 1.47% | Optional | All, except AMEX |
| Housing | 1.61% | No | All, except AMEX |
| CRED | 1.8% | No | All, except AMEX |
| PhonePe | 2% | No | All |
| PayTM | 2.2% | No | All, except AMEX |
| Mobikwik | 2.36% | No | All, except AMEX |
| PayMatrix | 2.36% | No | All, except AMEX |
*Service charges keep on varying but the best platform remains constant and that is undoubtedly RedGiraffe with the lowest fee structure since inception.
Credit Rotation and Implications
During the lockdown, since many people were finding it hard to make spending on their cards they resorted to making fake rent payments to their family and friends to earn reward points and achieve milestones without knowing its consequences. Since all the rent payment transactions are captured by AIS nowadays as everything is linked to PAN. So,
- If you are paying rent greater than ₹50,000 in any month, you have to compulsorily deduct 5% TDS and pay the net amount after tax deduction to your landlord else no deduction is required under section 194IB. Else you can be made an assessee and penalized.
- The person receiving such amounts is liable to show it as income from House Property and pay applicable taxes on it after necessary deductions as per their tax slab. Failure to do all this may lead to interest, fines and penalties.
- Even if the landlord is earning more than ₹2.5LPA but less than ₹5LPA then he is liable to file ITR.
- The total cashback earned on the credit card is also taxable if the amount on all your cards is equal to or greater than ₹50K as per Section 56(2)(x) of the Income-tax Act. You need to report it under the head ‘Income from Other Sources’ or ‘Profits and Gains from Business or Profession’, as the case may be.
- And if the recipient is not owning any property then it is nothing but a case of misrepresentation and financial fraud.
So beware of all this before doing any such transactions. Nowadays banks have also started levying charges on rent payments and some have capped or altogether removed reward point earnings on such transactions.
Consolidated List of Surcharges By Different Card Issuers
| Card Issuer | Rental Payment Surcharges | Reward Accrual | Eligible for Milestone Benefits |
| AU Bank | No charges for 1st transaction in a month, and 1%+GST is applicable from 2nd transaction. | 1.25% for Zenith and 1 Reward Point for other variants. | Yes |
| Axis Bank | 1%+GST on all transactions. | Only for Magnus, Reserve, Burgundy Private, and Atlas. | No milestone benefits. |
| Bank Of Baroda | 1%+GST on all transactions. | Reduced rewards as per variant since rent comes under restricted MCC. | Yes |
| Citibank | NIL | Regular rewards as per variant. | Yes |
| HDFC Bank | No charges for 1st transaction in a month, and 1%+GST is applicable from 2nd transaction. | N/A. | Yes |
| HSBC | 1%+GST on all transactions. | Regular rewards as per variant. | Yes |
| ICICI Bank | 1%+GST on all transactions. | Regular rewards as per variant. | Yes |
| IDFC First Bank | 1%+GST on all transactions. | Reduced rewards at 3X reward rate. | Yes |
| IndusInd Bank | 1%+GST on all transactions. | Reduced rewards at 0.7%. | Yes |
| Kotak Bank | 1%+GST on all transactions. | Regular rewards as per variant. | Yes |
| RBL Bank | 1%+GST with a monthly cap of 1 transaction allowed that too up to 50% of the credit limit. | Regular rewards as per variant. | Yes |
| SBI Card | ₹199+GST on all transactions. | Regular rewards as per variant except for 1X on SimplyClick and no reward on Cashback Card. | Yes |
| Standard Chartered Bank | 1%+GST on all transactions. | 2% for Ultimate and regular rewards for other variants. | Yes |
| Yes Bank | 0.50%+GST with a monthly cap of 3 transactions. | Regular rewards as per variant. | Yes |
Bottomline
Rental payment using credit cards is the best way to earn reward points and earn that next business-class ticket. There is absolutely no risk attached if you are financially disciplined and following all the IT Act regulations on rent payments. Since this is a significant monthly expense for anyone who has a rental property, I would suggest everyone should explore the Best Credit Cards for Rental Payments and earn the best rewards possible.
Do you pay rent using your credit cards then which portal and credit card combination is your favourite? Tell us in the comments below!