Abhi
Paying rent sucks. To make it a little more pleasant, CRED app is now allowing users to pay rent using credit cards to their landlords! Yes! Now on you can start earning points and rewards for paying rent too! There is a catch though, CRED is charging a service fee of 1.5% on your rent. Here is how this works and my analysis on the pros and cons of paying rent with credit card.
Benefits of paying my rent with a credit card
Earn rewards and loyalty points from your credit card for paying rent
When you pay the rent with your card, you will be earning the loyalty points just like any other shopping. Eg, if I am paying rent of Rs.25,000, paying the same through a credit card can get me 1.5% to 2% of the money back in the form of loyalty points from the credit card
Earn CRED points when paying back the credit card
When you pay back this money into the credit card, you can use CRED and that gives you 1 CRED point per Rs.1 paid, so I get 25000 CRED points which is worth abut 1% as per my calculation. Read my full CRED review here.
Get 45 days to pay back this money
You will have 45 days to pay back this money. If you consider a FD interest of 7%, for this 45 days this money is with me, it is worth another Rs.220, about 1% of my rent in this example of Rs.25,000.
Flexibility and in cases of emergency
This gives you a lot more flexibility, if you are ok with the fee of 1.5% then you can use CRED to pay your landlord using your credit card and use the cash you have for more pressing matters. Later on paying back the credit card.
Club and convert to EMI:
In current scenarios, if you are short of cash, you can work out an agreement with him to pay the rent for a couple of months together later. Then pay it using credit card via CRED, later you can convert this to an EMI for 6 months or more (additional interest will apply of course).
The disadvantages of paying your rent on credit
Service charge of 1.5%
CRED is charging a service fee of 1.5% for facilitating this service. This sucks big time! Now it is upto you to calculate properly if the above benefits from loyalty points etc are more than 1.5%, only then will you be able to get any advantage out of this.
Credit cards can be deadly if you are not disciplined
If you do not pay on time, you may end up paying high interest, penalty and even screw up your credit scores
Appears on the record for your land lord
CRED says, rent of more than Rs.50,000 will require the landlord’s PAN number to be furnished. In addition, CRED is asking for the address and landlord’s bank account details. All this means, it will be showing up on his accounts If he/she has been asking for hard cash to avoid tax, they may not be happy with this solution.
Time needed: 10 minutes.
How can I use CRED to pay rent with my credit card
- Log in CRED (Sign up if you haven’t already)
Use this link to sign up to get a sign up bonus ?https://zo.fo/CRED
- Go to “Control” you see on the top right of the screen
- Right at the bottom of the control screen you will see an option to “Pay rent”
And yes, this is my account and I have a shitload of points on CRED and redeemed 52 rewards in the past 1 year? - Click on it, fill in how much rent you need to pay
- Enter your landlord’s name.
Important: This needs to be exactly as it is on their bank account, if not your payment will fail
- Enter your landlord’s bank account details
Account number and IFSC details are required
- Enter the address of the property you are paying rent for
- Enter your landlord’s PAN number, if your rent is more than Rs.50,000.
Also, don’t enter a fake PAN or your PAN number, CRED checks this and rejects invalid entries.
- Choose Credit card or UPI to pay the rent.
UPI means you pay the rent from your bank account to the landlord’s bank account. There is no service charge for UPI.
- You will see a confirmation screen showing the total, that is your rent, plus 1.5% service charge by CRED
- After making the payment, the money will reach your landlord’s account in 1-2 hours post successful confirmation
In conclusion, see if you really need this service. For if you pay money directly you save 1.5%.
Read my complete review of CRED app and it’s benefits here
If you don’t have CRED yet, sign up! You earn points for paying credit card bills and no additional charges! Use the button below to sign up and get a joining bonus!
Few questions on CRED App
Yes, the team is world class and they follow best of encryption standards and protocols. Additionally, CRED is headed by Kunal Shah, the co-founder of Freecharge which adds more to the trust factor.
No, there are no additional fees for paying for credit cards on CRED
