ICICI Bank has over 11 million credit card holders in India. Now in a move that may put additional burden on credit card holders, the bank has levied a new fee of one per cent on payment of rent using credit cards. In a message sent to its customers, the bank said, “Dear customer, from October 20-22, 1% will be charged on all transactions on your ICICI Bank credit card for payment of rent.” With this, ICICI Bank has become the first bank to levy charges on payment of rent using credit cards.
Pay rent using credit card
There are various third-party platforms like Red Giraffe, MyGet, Cred, Paytm and Magicbricks that allow users (tenants) to pay rent using their credit cards. However, they charge a fixed service fee instead. All users have to do is input their credit card details on the platform, then go to the rent payment option and fill in the details like name, bank account number, IFSC code or add the UPI (Unified Payments Interface) address of the landlord. And then make the desired payment.
How will this affect credit card holders?
Let’s say you pay rent of Rs 12,000 per month using your credit card, then the payment platform also charges you between 0.4 per cent and 2 per cent. Let’s say the platform charges you 1 percent for the transaction, thus the amount to be deducted from your credit card will be Rs 12,120. Now, when your bill is generated, ICICI Bank will levy its own 1 per cent fee (Rs 12,120) on the transaction, thus you will pay around Rs 12,241 to the bank. This means that the one per cent charge in this case will put an additional burden of around Rs 1,452 per year on ICICI Bank credit card holders.
Why this allegation?
Financial experts say that while many platforms facilitate payment of rent using credit cards, there is no mechanism to ascertain the authenticity of the landlord (except Red Giraffe). Thus, the service can be misused by cardholders as they can make payments to their relatives or friends by posing as landlords to convert the payment into cash, thus avoiding the high charges levied by banks for the service. Provides the facility of cash withdrawal from the card. , Banks charge around 2.5-3% for cash withdrawals from ATMs using credit cards.