ICICI Bank Credit Card Charges Increase: Here's What You Need To Know

ICICI Bank has imposed extra charges of 1% on rent paid through ICICI credit cards. Here’s all about the charges, their reasons and the impact.

You might often use credit cards for large transactions such as rent payments. These payments usually fit into the range of thousands of rupees, bringing upon larger credit bills and larger interest rates. Hence, carrying out such transactions through your credit card can make it difficult for you to repay the hefty credit card bill that will follow. This could impact your credit score, your credit card interest rate, your transaction limits, etc.

ICICI Bank has hence imposed major charges on rent-related payments made through an ICICI credit card. Each transaction will now be levied with a 1% surge in addition to other charges, leading to a considerable hike in the amount you will have to pay in total.

What are the Levied Charges

If you use your ICICI credit card for paying your rent, an extra charge will be levied onto the total amount of the transaction. ICICI Bank has instilled a regulation which states that 1%, as associated charges, will be imposed upon any transaction you make in order to pay your rent.

A message was sent by ICICI Bank to all its credit card holders, alerting them about the revision of the payment structure. The SMS sent on September 20, 2022 read, “Dear Customer, starting 20-Oct-2022, all transactions on your ICICI credit card towards rent payment will be charged a 1 percent fee.”

What Will be the Consequences

The maximum force of the brunt will be borne by tenants. If you use your ICICI credit card to pay rent, the charges introduced by the company will be levied on your rent-related transactions. It must be understood that rent payments are large transactions that are worth thousands of rupees.

Repaying the credit card bill which will follow those monthly transactions will burden you with a large amount to cover. Inevitably, the payment of credit card bills might get delayed. Hence, your credit score, interest rates, credit limit and credit utilisation ratio might be severely affected.

The Reasons Behind the Extra Charges

To understand the reason why these charges were levied, let’s understand how credit cards are utilised with the intent of paying rent. Credit card users often use third party sites and portals to deem their relatives or friends as landlords to transfer funds to their accounts without any extra charges imposed. Banks generally charge between 2.5% to 3% on credit cards for ATM cash withdrawals. Sites such as Magicbricks, Cred, Paytm, MyGate, RedGiraffe, etc. support credit card transactions made in order to pay rent.

Such sites require you to only enter general details such as your name, bank account number, IFSC code or the landlord’s UPI (Unified Payments Interface). Next, a payment method is selected as per the beneficiary and benefactor’s convenience.

An additional charge will be levied on this exchange from October 20, 2022 onwards. With the 1% charge clubbed with the basic charges, you will be required to pay an extra 3.5% to 4% on rent-related transactions. The intent is to discourage the malpractice of stating personal relationships as a landlord-tenant relationship in order to carry out fund transfers of such nature.

Additionally, larger transactions such as rent payments can bring on larger credit card bills which include the ICICI credit card interest rates combined with the total amount payable. Payment of such bills can be difficult and hence, lead to you defaulting on your credit card bill payments or delaying them. The new charges implied are to make transactions and payments seamless and transparent for ICICI Bank and the ICICI credit card users.

Reasons Why You Shouldn’t Pay Rent with a Credit Card

●      Dipping Credit Score

Should that rent payment lead to you being unable to pay the credit card bill that follows, a negative impact is created on your credit score. Endangering your credit score could risk your potential to apply for secured loans in the future. Subsequently, the interest rates imposed on your payments and repayments will increase significantly.

●      Credit Utilisation Ratio

Larger expenses like paying the rent could reflect majorly on your credit utilisation ratio. The higher your credit utilisation ratio is, the lower your credit score could drop. Rent transactions push the limits of this ratio and should your utilisation ratio surge beyond 30%, your credit score could be severely bruised as a result.

●      Higher Interest Rates

Credit card bills can seem hauntingly high due to the sky-high interest rates attached to them. Making larger transactions could result in even larger amounts to be paid by you through a credit card bill and failing to pay the bills on time could contribute to the increase of the interest rate itself.

●      Credit Card Maxing-out

Maxing-out your ICICI credit card refers to exhausting the credit limits of your card which puts a sudden halt on the usage of your credit card. You can no longer use your ICICI credit card to make payments should it max-out. Constantly utilising your credit card to pay rent could lead to maxing-out this particular financial instrument, furthermore affecting your credit score and credit card payments.

Conclusion

The ICICI Bank brought about a revision in its fee structure surrounding rent payments through the ICICI credit card. This change levies a 1% additional charge on any transactions made with an ICICI Bank credit card to pay rent. The big transaction, the ICICI credit card interest rates and additional charges combined would be a large amount for the credit card users to pay. Additionally, fallacious transactions will be discouraged.

To continue using the ICICI credit card for rent payments is still a choice the credit card user can make. However, this could be a motion towards not tolerating malpractices or discouragement of delayed payments, keeping the focus on maintaining a good credit health and financial future for all ICICI Bank credit card users.