Pros and cons of paying rent with credit card

February 10, 2021 Finance Talk Valli Sarvani No comments

While a majority of tenants pay rent in cash, some of them use net banking to pay it. Payment of rent using a credit card is a new trend. It is growing now in many urban areas.

In this scenario, many apps help users pay rent with their credit card.

Here are the benefits of paying the rent with a credit card:

Normally, banks charge an annual fee for credit cards. It can be waived if you spend the minimum required amount. To meet it, several users unnecessarily spend on various items which they don’t need. But if you use your credit for paying rent, then you can easily meet the credit card spending limit and thereby avoid an annual maintenance fee.
In addition to that, you can get bonuses, rewards and reward points, milestone rewards and any other target-based rewards.
Payment of rent with a credit card promotes convenience.
There is no need to have cash in your account to pay with a credit card. Credit cards have a due date of around 45 to 60 days for bill payment. That means you need to pay the credit card payment within the duration given by the bank. If you pay the amount in the given period, there is no need to pay interest on that amount. You can use the cash in your account for other needs. Thus, you can have a better cash flow. Besides, on-time payment of dues and bills will improve your credit history and score.

However, there are certain disadvantages also:

Payment of rent with credit card attracts processing fee or charge. So, you have to pay an additional amount each month along with rent.
To maintain a good credit score, your credit card spending should not exceed 30%. If you pay rent, it may exceed your spending limit which in turn can impact your credit score.
If you do not pay credit card bill on time, you have to pay interest on the outstanding amount. It also adversely affects your CIBIL score.

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