Paying rent by credit card may not be rewarding enough now; banks raise fees, limit transactions

Paying rent by credit card may not be rewarding enough now; banks raise fees, limit transactions

Photo: BCCL

New Delhi: Credit cards have long been associated with rewards and points, which is why many people prefer this payment method to pay their rent. However, it can no longer reward the renter as it used to, as card issuers have started restricting these payments to prevent abuse.
Starting Thursday, October 20, ICICI Bank cardholders will be charged a 1% fee on rent payments. The SBI card, on the other hand, will levy a processing fee of Rs 99 (excluding taxes) on rent payments from November 15. While India’s largest private lender HDFC Bank has limited rent payment reward points to 500 points, Yes Bank has limited such transactions to twice a month.

While credit card issuers gave no reason to levy fees on rent payments or limit the number of transactions, a banker shared that restrictions are being imposed because such payments may not be in good faith. . “People use these services to transfer money to friends and family members instead of owners because there is no beneficiary verification,” the banker told ToI, speaking on condition of anonymity. .

People may make fake transactions with their friends or family in the name of rent as these are usually high value transactions and would yield more reward points. Additionally, the cardholder will also be able to meet the annual spending milestones that often lead to a credit card’s renewal fee being waived.

“Banks are charging fees for cash withdrawals from credit cards. But now they find customers are practically withdrawing cash thanks to gaps in rent payment services,” an actor said. industry.

Although platforms that allow rent payment also charge a convenience fee, it still proves cheaper than withdrawing money from credit cards through ATMs, experts said, adding that if payment companies acquire owners as merchants after doing KYC, card issuers shouldn’t have a problem.

Comments are closed.