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Rent via credit card? The hidden costs and CIBIL hit
A 2% processing fee on rent adds ₹4,800 a year. High credit utilisation from rent payments can lower CIBIL scores, lenders warn. Use cards only for emergencies.
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Paying rent with a credit card sounds convenient, but the fees and credit utilisation risks can outweigh the rewards. Landlords or property managers often tack on a processing fee of 1% to 3% of the rent amount, according to a blog post by AU Small Finance Bank. On a ₹20,000 monthly rent, a 2% fee adds ₹400 a month, or ₹4,800 a year, before taxes.
The bigger risk is the interest cost. If the full bill isn't cleared by the due date, the outstanding balance attracts high interest, making rent significantly more expensive. The same blog post noted that processing fees compound the cost, turning a fixed expense into a recurring drain.