With the onset of the pandemic, a lot of us have been lesser fortunate when it came to jobs and salary cuts. Tough times call for tougher solutions. Remember how oil plunged to negative for a short period? The idea we are going to discuss today is far less crazy than that (well, at least). Paying rent with credit card? What?

So, we cannot deny we never gave it a thought? With a staggering 28% of urban population living in rented accommodation these days (source), it is highly like that we may think of using our credit cards to pay rent. But how? And is it smart to do that? Let’s get started.

There are a few platforms available which enable you to pay rent by credit card.

• CRED RentPay
• NoBroker
• Housing
• Redgirraffe

I will cover step by step guide for paying rent with cred and compare all four services.

Step 1:

Download cred from playstore (for full review of cred app, click here) and head over to the section that says “Pay Rent”.

Step 2:

Enter the amount you want to pay as your rent.

Step 3:

Enter the full name of your landlord. In the next page, enter account number, IFSC code of landlord. At this point, you may use UPI ID as well if you are not sure of the bank details.

Step 4:

Cred confirms address, pin code, state and city of the landlord.

Step 5:

Choose the credit card you want to pay with and voila! You have paid your rent on credit.

For all of you who are thinking that this is great. Let us now discuss why should you think twice before doing this.

Since credit card payments are charged at some rate by the government, platform will not bear it and would charge a service fee for completing this transaction. Table below compares the service fee levied per transaction:

I have never used Redgirraffe but a lot of online reviews say that UI is pathetic and there are tons of physical documents that need to be uploaded in order to enable this, hence the low price.

Should I use my credit card for paying rent?

The short answer is, it depends. I will give a quick step by step mathematics of how I’d go about it.

1. I pay a rent of 30k (an average figure for someone living in Mumbai suburbs).

2. For paying 30k rent, cred would charge me approximately Rs. 450 as service charge.

3. This in return will give me 600 points (I get 1 point for Rs. 50 spent on the card)

4. Value of a point depends on where you use it. In this case I’d assume that we’ll use it simply to knock off our outstanding. So, in that case per point price is Rs. 0.25

5. That means I would get Rs. 150 in return. Along with this I will get 30,000 cred coins as well.

I leave it up to you to decide if 30,000 cred coins are worth Rs. 300 or not. And this is just to break even.

Conclusion

So, in toto, totally depends on what type of credit card you hold, what is the reward program you are enrolled in and how much rent you are actually going to pay. Not to forget, that if you miss the payment next month, you will be charged with an interest of ~3-4% per month (which is very expensive).

As far as I am concerned, I always follow the good old rule of spending and investments, “When in doubt, stay out”. So I will give a pass on this scheme.

Until Next time..