Paying a house rent is an important and recurring monthly expense for an individual. Generally, the rental amount is paid by cash, online, or cheque by the tenants. However, paying rent via credit card is a new method, becoming popular due to the various advantages it offers, such as better flexibility in personal liquidity, cashback, and reward points.

Individuals have been using credit cards to spend for various purposes such as shopping, dining out, booking flight or movie tickets, and hotels. Along with these transactions, credit cards are now also being used to make rental payments.

It gives out benefits as against using cash, cheque, or online bank transfer to make rent payments, hence the market for such service is growing rapidly. Here are some of the advantages discussed of paying rent via credit card:

Provides financial benefits

An individual has the option of making a payment through various means, such as cash, debit card, credit card, online bank transfer, and Unified Payments Interface (UPI). However, several attractive financial benefits are offered by the credit card issuers such as Banking, Financial Services, and Insurance Sector (BFSI) companies to encourage their customers to use their credit cards over other payment modes.

Following are some of the benefits that a user may get on using a credit card for making a payment: 

Attractive and easy payment plans 

Majority of the time companies provide credit cards or even offer attractive payment plans. For instance, if you pay via their credit cards, they will provide you a 45-day interest-free period, which is practically free credit for more than a month. Since cash and cheques are more upfront modes of payment, such benefits can be availed only if the payment has been made through a credit card 

Rewards and points

A particular number of reward points is offered by BFSIs for spending a specific amount of money through their credit card. For instance, a certain BFSI offers four reward points for every Rs 150 spent on things such as insurance, education, utilities, and rent, with one of their credit cards.

Every credit card issuer provides a varied number of reward points according to their terms and conditions. You can redeem these reward points and can use them to purchase products on dedicated bank websites,  airline/travel/hotel websites, and e-commerce shopping platforms, depending upon the respective credit card issuer’s policy.

Note – You should check the reward policy of your card issuer and find out whether you are eligible to receive rewards for making rental payments.

Cashback offers

A financial benefit wherein a credit card user gets a set sum of money or a specified proportion of the transaction value back in cash. For instance, a well-known BFSI provides cashback of up to Rs 3,000 when rent is paid with their credit card for three in a row.

Gift vouchers

Gift vouchers are used as an alternative for cash, gift vouchers are used as an alternative to cash for purchases made in specified online or offline markets. Many companies give their clients gift cards to make transactions for a specific product or market.

Waiver on Annual maintenance charge/renewal fee 

Certain credit card issuers offer a partial or complete waiver of the annual maintenance charge/renewal fee (which can range between Rs 500 and Rs 2,500) on spending a minimum amount of money via their card.

For instance, a well-known Indian bank completely waives its annual renewal fee of Rs 2,500 (excluding taxes) for making transactions of more than Rs 3 lakh through their credit card. If you make your rental payments through a credit card, reaching such amounts will be easy and could result in significant savings.

Create a line of credit

Regular use of credit cards for transactions establishes a line of credit, which is a preset borrowing limit that can be tapped into at any time. The same is vital since it offers credit rating bureaus to view active credit history and gauge your creditworthiness based on your card usage and repayments.

On repaying of credit card dues on time and in full, will help in maintaining a good credit score making it easier to avail of a loan from a financial institution in the future, and at a competitive interest rate.

Note – Check over regular use over 30 percent of the provided credit limit to avoid any negative impact on your credit score.

Improvement in personal liquidity

The deferred payment system on a credit card allows you to use a credit card now and pay for your purchase/s later. When using credit money does not get deducted immediately from your savings account, therefore your bank balance does not get affected.

Naturally, you will need to repay the money later on. The company will allow you to pay a minimal amount for sometimes if you don’t want to make full repayments by charging a high-interest rate on that unpaid differential between the minimum amount you have paid and the outstanding bill amount.

You can pay your rent using a credit card and pay the dues later to the issuer in case of any emergency situations when you need to use the existing bank balance for other purposes than your monthly rent such as family or personal medical emergency, debt, and investment losses or any others. 

Lower the chances of delay in rent payments 

Delays for a few days in rent payment can raise questions in the landlord’s mind about your intent to pay the rent for the remainder of the lease. It could also negatively affect your relationship with them, limiting your chances to continue living in the same property and renew the lease.

Certain credit card companies provide the services of automatic payment of rent which helps to minimize the chances that you may forget to make payment while engaging with a number of urgent commitments. 

Ease in claiming the HRA benefits 

Several organizations provide their employees a certain amount of money as a  part of the salary package each month to pay their rental expenses. This part of the money, known as House Rent Allowance (HRA), can be used to claim a tax redemption by employees while filing their Income Tax Return (ITR). 

You will be required to provide your monthly rent receipts to your employer to claim such benefits. Making payments of rental expenses through the credit card acts as proof of rent payments to your landlord. Certain credit card companies provide the rent receipt generating service of paying rent through their card. You can use these receipts to show to your employer for claiming the HRA benefits.

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