Advantages and Disadvantages of paying rent via credit card in India

If you are living in rented accommodation or you have a rented office, rent constitutes a substantial portion of your total expenditure. Cash is probably the most preferred medium for rent payment. However, over time, digital payments and credit cards have become a popular means of paying rent in India, especially if you face financial crunch, as most people are facing right now. Here in this article, we would be discussing about the advantages and disadvantages of paying rent via credit card

First, let’s get into the benefits of paying rent via Credit Card-

  • By using a credit card to pay you rent, you get the liberty of paying it off later and offsetting your financial woes temporarily. You can even convert your rent into EMIs as offered by various credit cards.
  • Paying Rent via credit card and clearing your credit card dues also improves your credit score as doing so would build a positive payment history and improve your credit mix.
  • When paying rent via portals, the rent receipts are automatically generated, which you can submit and claim HRA exemption. You don’t need to ask your landlords for rent receipts anymore.
  • In some portals, you can also set the option to charge your credit card on a fixed date and deposit the rent. This way, you don’t have to worry about missing the payment date.
  • Lastly, you may also earn reward points by paying rent through your credit card. You may also able to complete your milestones set on various credit cards and receive rewards for the same. The reward points depend from card to card. You should check whether your card provides reward points on rent payment and also whether the monetary value of reward points offsets the convenience fee charges. To make this point clear, like if you pay via Cred, they charge 1.5% as a convenience charge. If the monetary value of the reward points earned on your credit card is more than 1.5% then only you should pay via them. Also if you use Amex to pay via, you won’t be earning any reward points. The amount paid would just help you to complete your milestones.

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.

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