look news india
House rent is the biggest expense every month for employed and middle class families living in rented houses in metro cities to tier-2 and tier-3 cities. Many times, when there is a delay in salary in the beginning of the month or there is a shortage of cash, people choose the route of making rent payment through credit card. However, after the new Payment Aggregator (PA) guidelines of the Reserve Bank of India (RBI) and the strict rules implemented by the banks, the entire process and mathematics of paying fare through credit card has changed. If you are also planning to transfer the rent to the landlord’s account by swiping a credit card this month, then it is very important to understand the official rules of RBI, additional charges of banks and its impact on your financial health.
Is it legal and possible to pay rent by credit card?
The simple and obvious answer is—yes, house rent can be paid with a credit card, but the process is no longer as easy and completely free as it used to be. Since most landlords do not accept credit cards directly from a bank or through a PoS machine, tenants have to resort to authorized fintech platforms, property portals (like NoBroker, Magicbricks, Housing.com) or banks’ own bill-pay portals. These platforms deduct the amount from your credit card and send the money directly to the landlord’s registered bank account through bank transfer or UPI.
What rules have been changed by RBI’s Payment Aggregator (PA) Guidelines?
The Reserve Bank of India has imposed strict regulations on payment aggregators to curb unauthorized fund routing, suspicious transactions and unverified transactions.
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Merchant and Know-Your-Customer (KYC) Verification: As per RBI rules, credit card payments through any payment gateway or aggregator can be sent only to those merchants who have a valid business contract and complete KYC. Since individual landlords do not fall in the traditional ‘merchant’ category, the RBI had taken strong exception to rent payments being made without documentary evidence.
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Strictness on third-party apps: Following the RBI stance, many leading fintech apps have either stopped simple wallet transfers without a rent agreement or have made it mandatory to upload the landlord’s PAN card (PAN), bank account details and a valid rent agreement.
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Ban on fake rent payments: Many people used to convert the credit card limit into cash by creating fake rent receipts in the name of their own relatives or friends. After joint monitoring of RBI and Income Tax Department, such illegal rotation has been completely banned.
How much is the extra charge for paying fare through credit card?
Rent payment through credit card is no longer ‘free’. If you use the card, you face double financial charges:
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Platform or Convenience Fee: Third-party portals providing rent payment services charge a platform processing charge ranging from 0.39% to 2% on the total rent amount.
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Bank Rental Surcharge: Almost all major banks like HDFC Bank, ICICI Bank, State Bank of India Card, Axis Bank and Kotak Mahindra Bank have started charging additional rental transaction surcharge of 1% to 2% on rent payment through credit card.
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18% GST: Keep in mind that an additional Goods and Services Tax (GST) of 18% is also deducted separately on both bank surcharge and platform fees.
Understand with example: If your monthly rent is ₹30,000, then including 1% bank surcharge (₹300) + 1.5% platform fee (₹450) and 18% GST (₹135) you may have to pay an extra ₹885 per month. This additional expenditure exceeds ₹10,000 in a year.
The benefits of reward points and cashback also ended.
Earlier, people used to pay fares through credit cards so that they could get huge reward points, milestone benefits and airmiles. But as per the current rules, almost all the big banks have completely stopped giving reward points and cashback on rent payment transactions. Along with this, most of the banks have excluded rent expenses from the total annual spend milestone which is counted for Annual Card Fee Waiver.
What can be the adverse effect on credit score and CIBIL?
House rent is a major financial expense. If the total credit limit of your credit card is ₹1 lakh and you pay rent of ₹35,000 every month through the card, then your credit utilization ratio (CUR) goes straight beyond 35%. As per the standards of Credit Information Bureau (CIBIL/Experian), credit utilization more than 30% can negatively impact your credit score. Moreover, if you are unable to pay the entire credit card bill by the due date, banks charge huge interest rates ranging from 36% to 42% per annum, which can trap you in the web of debt.
What are the safe options for paying rent through credit card?
If you have to use a credit card in a financial emergency, keep these things in mind:
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Use only authorized and regulated platforms (like NoBroker, RedGiraffe or the bank’s own official app).
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Upload the landlord’s correct PAN number, bank account number and copy of the rent agreement on the portal, so that in future no notice is received by the Income Tax Department while claiming HRA exemption.
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Pay the entire bill in one lump sum before the credit card bill due date at the end of the month; Do not make the mistake of filling only ‘Minimum Due’.
The safest and most economical way to pay fare
To avoid unnecessary financial charges and bank surcharges, transferring fare directly from bank account through UPI, Net Banking (NEFT/RTGS/IMPS) or Bank Auto-Debit (NACH) is the most economical, secure and transparent option. There is neither any additional service charge nor any adverse effect on your credit score.