Does it make sense to pay hire by way of a bank card?

Sachin, a resident of Vijaywada in Andhra Pradesh who goes by just one identify, began paying home hire utilizing his bank card by way of Cred for the sake of comfort. He had for lengthy been utilizing the app for his bank card funds and the hire fee characteristic allowed him so as to add one other recurring fee to the listing.

“I received casually habituated to the characteristic because it saves me the trouble of remembering the fee each month,” he said. However, Sachin is prudent about credit card usage. “I don’t use credit cards for other expenses and make sure to repay the bills fully within the interest free window.”

What in regards to the transaction price that he has to pay for every fee? “Yes, I understand that there’s a value, even when it’s small, for the comfort. Also, more often than not, the service cost will get waived off towards the Cred cash gathered in my account,” he said.

Like Cred, many platforms like Mygate, Nobroker, Paytm, PhonePe and Magicbricks, among others, allow users to pay rent using credit cards. As with most transactions done through credit cards, cardholders stand to earn rewards.

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What’s on offer

You just need to add the landlord’s bank account details or UPI (Unified Payments Interface) address under the recipient option and complete the transaction. You need to furnish your landlord’s PAN details if the payment exceeds ₹50,000. Some platforms may ask you to add the address of the property, but you don’t need to upload the rent agreement, past rent receipts or any other supporting documents with regard to tenancy. “We have an automated risk-mitigating system to monitor all rental transactions. In case we find any discrepancies or if a transaction appears to violate the purpose of the service, we ask for a rental agreement to complete the transaction,” mentioned Praveen Boda, chief monetary officer, MyGate.

Some platforms could ask you for a rental settlement if the month-to-month hire exceeds a sure restrict pre-determined by the platform. As for rewards, every platform has its personal reward system and this will fluctuate on the playing cards the platform has tie-ups with. Raj Khosla, founder and MD, MyMoneyMantra.com, mentioned gives on hire fee characteristic are transitory in nature and customers could not at all times get rewards. For occasion, Sachin has but not earned any cashback or different rewards on the 4 hire funds he has made thus far.

Should you employ it

“Paying hire by way of a bank card is definitely rewarding as you get system-generated hire receipts, further liquidity due to the 45-50 interest-free compensation window; reward factors; facility of automated funds, and the advantage of paying hire even when there’s a funds shortfall,” mentioned Khosla. But, he added, that the cumulative benefits come at a price that additionally requires you to stay fiscally disciplined. Most platforms cost a service or transaction price on this characteristic (see desk). Since the platform doesn’t cost MDR (service provider low cost fee) to the owner, which is the service provider on this case, it fees the consumer paying the hire within the type of transaction price.

Defaulting on bank card invoice fee and even paying the minimal due attracts curiosity on the principal which may balloon to over 30% yearly. Customers must also watch out to not exhaust the credit score restrict incessantly as excessive bank card utilisation fee can have a long-lasting injury to the credit score rating.

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