HDFC Bank Ltd. has introduced a new fee structure for its credit card rent payments through platforms such as CRED, Paytm, Cheq, MobiKwik, and Freecharge. Effective immediately, customers will incur a 1% fee on rent transactions, capped at Rs 3,000 per transaction.
This move comes amid similar adjustments by other credit card issuers, which have recently ceased offering reward points for rent payments. ICICI Bank Ltd. and SBI Cards & Payment Services Ltd., for instance, stopped rewarding such transactions earlier this year, aiming to realign their policies.
The decision by HDFC Bank to levy charges on rent payments via credit cards may influence other financial institutions to adopt similar measures. The trend reflects concerns within the banking sector regarding the usage of credit cards for non-traditional transactions like rent payments.
Prior to this, ICICI Bank and SBI Cards discontinued the practice of awarding reward points for rent payments on many of their credit card variants.
From Feb. 1, 2024, rent payments and e-wallet loading transactions made using ICICI Bank credit cards no longer accrued any reward points, except for specific cards such as the Amazon Pay ICICI Bank credit card. In April, SBI Cards also stopped offering reward points for rent payments.
Notably, this move has not been influenced by any regulatory action since the RBI has not officially asked banks to stop rent payments.
Most people use credit cards to pay rent because they can be conveniently used to pay rent through various websites and mobile applications that provide rent payment services. Another significant feature is that rent is automatically deducted, ensuring users never miss a payment. Moreover, customers benefit from a credit period of 45–60 days since the rent remains in their savings bank account. During this period, users can earn returns on the amount.
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