Now Reading: Credit card rent payments can raise costs and hurt CIBIL scores
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Credit card rent payments can raise costs and hurt CIBIL scores
Credit card rent payments can raise costs and hurt CIBIL scores
Paying rent with a credit card may help manage cash flow or earn rewards, but it can add fees and increase borrowing costs. Processing charges may range from 1% to 3% of…
The Story in Brief
Paying rent with a credit card may help manage cash flow or earn rewards, but it can add fees and increase borrowing costs. Processing charges may range from 1% to 3% of the rent, according to an AU Small Finance Bank blog post. On a Rs 20,000 rent payment, a 2% fee would add Rs 400 a month, or Rs 4,800 a year, before taxes.
Carrying the balance beyond the due date can attract high interest, while paying only the minimum due leaves the rest accruing charges. Rent also uses available credit. A Rs 30,000 payment on a Rs 1 lakh limit means 30% utilisation before other spending. Banks generally advise keeping utilisation below 30%, as higher use can hurt the CIBIL score.
The Indian Opinion
The easy-money pitch around credit card rewards ignores the basic arithmetic. A fee, taxes and interest can quickly outweigh points, while treating a fixed bill as recurring debt is risky. But a single rent payment should not be portrayed as an automatic CIBIL disaster. The practical test is simple: can the full bill be paid by the due date, while utilisation stays below 30%? If not, the rewards are not worth the cost.
Source: livemint.com
This story was synthesised by AI from the source linked above.
