Should You Use a Credit Card for Rent Payment? Pros, Cons & Charges Explained

Imagine earning reward points, cashback, or even a free flight — all by simply paying your rent. Sounds great, right? But what if this also comes with hidden fees, interest traps, and credit score risks? In today’s fast-paced digital world, paying rent through credit cards is gaining popularity in India. But is it really a smart financial move? Let’s dive deep into the facts, numbers, official charges, and consequences before you swipe that card for rent.

Illustration of a confused man holding a credit card with a rent payment app on phone, house icon, Indian rupee symbol, and blog tips on screen with the text ‘Should You Use a Credit Card for Rent Payment?’

What Is a Credit Card?

A credit card is a financial tool that allows users to borrow money up to a certain limit for purchases, bill payments, and online transactions. Unlike debit cards, credit cards use the bank’s money (not yours) upfront, which you repay later.

How to Get a Credit Card?

1) Eligibility: To get a credit card you must be 18+ years of age. You should have stable income, and a decent credit score (700+ is ideal).

2) Application: You can apply through a bank, NBFC, or online platforms to obtain it.

3) Documents Needed: The various documents required are PAN card, Aadhaar card, income proof, and address proof.

4) Fee Structure:

Both free and paid credit cards are available. Free Credit Cards are offered to salaried individuals or through special bank offers, while Paid Credit Cards come with joining and annual fees (typically ₹500 to ₹5,000+).

Types of Credit Cards in India

India’s major credit cards fall into the following categories:

a) Rewards Credit Cards

Rewards Credit Cards earn points on every purchase. You can redeem these rewards for vouchers, travel, or merchandise.

b) Cashback Credit Cards

You can get instant cashback on specific categories like dining, fuel, or groceries.

c) Travel Credit Cards

Travel credit cards are useful for Complimentary lounge access, air miles, and hotel rewards.

d) Fuel Credit Cards

Fuel credit cards are helpful for a Fuel surcharge waiver. You can also get additional cashback at partnered petrol stations.

e) Co-branded Credit Cards

There are some credit cards that are co-branded with their branded partners like Amazon, Flipkart, Tata Neu, etc.

f) Premium Credit Cards

Premium credit cards have a high credit limit and provide concierge services, travel insurance, and airport perks.

Should You Use a Credit Card for Rent Payment?

Rent payments through credit cards are processed using platforms like Cred, RedGiraffe, NoBroker, Paytm, etc., that act as intermediaries between your landlord and your credit card.

Scenario/ Example -

A tenant pays ₹25,000 rent via CRED using an HDFC Regalia Credit Card.

Reward Rate: 4 points per ₹150 spent
Total Points Earned:
₹25,000 ÷ ₹150 = 166.66 × 4 = ≈ 666 points
Value per Point (average for Regalia): ~₹0.25
Total Reward Value:
666 × ₹0.25 = ₹166.5
CRED Convenience Fee:
1.5% of ₹25,000 = ₹375
- 18% GST on ₹375 = ₹67.5
  Total Fee Paid = ₹442.5

Updated Analysis:

Rewards Earned = ₹166.5

Fees Paid = ₹442.5

Net Loss = ₹276

Final Note:

In many cases, HDFC excludes rent payments from reward eligibility (as per the updated 2024–2025 card terms). So:

If rent payments earn zero points, the full ₹442.5 is a loss.

Charges: The Hidden Costs of Using a Credit Card for Rent

a) Convenience Fee

Charged by rent platforms: 1% to 2.5% of the transaction amount

RedGiraffe: ~₹46/month flat rate

b) GST

18% GST on convenience fee

c) Interest Charges

If the full amount is not repaid by the due date, interest (30-42% p.a.) applies

d) Late Payment Fee

Penalty up to ₹1000 for missing the due date

e) Over-Limit Fee

Charged if rent exceeds your credit limit

f) Processing Fee

Some apps/platforms levy ₹100-₹500 processing charges

Pros & Cons of Using a Credit Card for Rent

Pros:

1) Builds credit history (if paid on time)

2) Earns rewards, points, or cashback

3) Helps meet spending thresholds for offers/milestones

4) Temporary liquidity boost in case of a cash shortage

Cons:

1) Convenience fees outweigh benefits in most cases

2) Negative credit impact if repayment is delayed

3) Platform dependency

4) Risk of debt accumulation

Is It Worth Using a Credit Card for Rent?

When Is It Worth It?

1) You have a high-reward or cashback card.

2) Your rent helps you unlock milestone rewards.

3) You need short-term credit (and will repay in full).

When is It Not Worth It?

1) You're trying to avoid paying from your savings.

2) You're already revolving credit (paying interest).

3) You don't track spending or repayment dates.

Verdict:

Use it strategically, not habitually.

Alternatives to Using a Credit Card for Rent

a) Bank Transfers (NEFT/IMPS/UPI)

Free or nominal fee with zero interest.

b) Auto-debit from Savings Account

Useful for recurring payments

c) Debit Card Payments (via Rent Apps)

Some platforms allow rent via debit card with a lower fee (~0.4%)

d) UPI-linked Credit Lines

Newer platforms (like LazyPay, Slice) offer UPI-based credit.

Expert Tips to Use Credit Cards Smartly

Always repay in full before the due date
Check reward-to-fee ratio
Set up reminders for due dates
Use the EMI option only if absolutely necessary
Keep credit utilization below 30%

Conclusion: Think Before You Swipe

While paying rent via credit card can unlock benefits, it’s not a one-size-fits-all strategy. Factor in convenience fees, interest charges, and your repayment discipline before opting in. When used mindfully, it can be a strategic financial move. But when misused, it can turn into a debt trap faster than you think.