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ICICI Bank to impose 1% charge on rent payments through credit card; find details here

File image of an ICICI Bank branch. Reuters

ICICI Bank has increased the load on credit card holders by implementing a new scheme. On Tuesday, the private sector lender notified its clients via an SMS that a one per cent fee would be applied to any transactions made with their ICICI Bank credit card for the purpose of paying rent.

This will be applicable from 20 October 2022. With this, it has become the first bank to charge customers who pay their rent with credit cards. This fee has been introduced to stop credit rotation through bogus rent payments.

Reason for this additional charge:

According to industry analysts, clients use third-party sites to add their relatives or friends as landlords and send funds to their bank accounts to turn them into cash at no additional expense. While using a credit card to make cash withdrawals from ATMs, banks typically charge between 2.5 and 3 per cent.

Rent can be paid with credit cards on a number of third-party sites, including RedGiraffe, Mygate, Cred, Paytm, and Magicbricks, although, they impose a certain processing fee.

Customers only need to enter their credit card information on the platform, select the “Pay rent” option, and enter information like their name, bank account number, IFSC code, or landlord’s UPI (Unified Payments Interface) address before selecting the appropriate payment method.

Impact on credit card holders:

If a consumer uses his credit card to pay Rs 15,000 in rent per month, the platform that processes the payment will additionally charge him anywhere from 0.4 per cent to 2 per cent. The amount that will be debited from his credit card will be Rs 15,150 if the platform charges 1 per cent for the transaction. ICICI Bank will now add its 1 per cent transaction fee to the customer’s bill (Rs 15,150), making the total amount due to the bank about Rs 15,300. This indicates that in this instance, the 1 per cent levy will result in an additional burden on ICICI Bank credit card holders of about Rs 1,812 per year.

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