Rent payments via credit card may resume; find out what this is, how it works, and understand the pros and cons..

If you pay rent monthly and want to avoid straining your cash flow while waiting for your salary, the concept of paying rent via credit card is likely familiar to you. A few years ago, platforms like PhonePe, CRED, and Paytm offered this service. However, the feature gradually disappeared due to regulatory concerns and the imposition of additional charges by banks.

According to some media reports, PhonePe and CRED are once again testing this service with a limited user base. If everything goes according to plan, the feature could become widely available again in the coming months.

What is a credit card rent payment?
Credit card rent payment is a facility that allows a tenant to pay their rent using a credit card. The fintech platform collects the amount from the credit card and transfers it to the landlord's bank account. This gives the tenant extra time to make the payment and, in some cases, allows them to earn reward points.

How exactly does paying rent via credit card work?
This model involves three parties:

Tenant
Fintech platform
Landlord
The process works as follows:
Step 1: The user enters the rent amount on the app.

Step 2: The user selects a credit card for the payment.

Step 3: The platform charges the amount plus a convenience fee to the card.

Step 4: The platform transfers the rent amount to the landlord's bank account.

Step 5: The user settles the payment later on the credit card bill's due date.

Let's look at an example:

Details    Amount
Monthly rent    ₹25,000
Platform fee (2%)    ₹500
Total card charge    ₹25,500
In this scenario, the landlord receives ₹25,000, while you gain a few extra weeks to settle the credit card bill (₹25,500).

Things to know before applying for a new card
Why did people like this feature so much?

There were several advantages to this:

Easier cash flow management
Extra time before the salary arrives
Opportunity to earn reward points
Credit card milestone benefits
Short-term liquidity support

Why was the RBI concerned about this model?
Previously, some platforms operated models where:

The landlord's explicit consent was not required
The platform was merely processing the payment
P2P (Person-to-Person) transactions were on the rise
The RBI was concerned that credit card usage was expanding into areas where traditional banking oversight might be limited. Consequently, many platforms discontinued or restricted this facility last year.

What is 'Wallet Loading'?
In wallet loading, a user adds money to a digital wallet using:

A credit card
A debit card
A bank account

Subsequently, the user can utilize this balance for:

Mobile recharges
Bill payments
Online shopping
Other transfers
Essentially, the money goes into the wallet first, whereas in rent payments, it reaches the landlord directly.

Will reward points still be available?
This is the biggest question. In recent months, several major card issuers have reduced or discontinued reward points on rent payments.

What changes should one watch out for?

Reward points policy
Convenience fees
Processing charges
Cashback eligibility
Monthly limits
If platforms reintroduce the feature, the card issuer's new terms and conditions will also be crucial.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.