Credit Card 1% Fees on Utility Bills, Wallet Loads, Rent and Education (2026): Bank-Wise Thresholds and How to Avoid Them
By Nitish Bharadwaj · Published Sep 28, 2026 · 6 min
Most large Indian card issuers now charge a 1% fee, plus 18% GST, on certain categories of spend. The usual targets are utility bills above ₹50,000 a month, wallet loads, rent, and school or college fees paid through apps such as CRED or PhonePe. The thresholds differ by bank. SBI Card charges on wallet loads above ₹1,000, while HDFC Bank starts at ₹10,000 a month. You can avoid most of these fees by paying institutions directly, splitting utility bills across cards and skipping wallet top-ups.
Between late 2024 and early 2026, India's largest card issuers quietly added a new layer of cost to everyday spending: a 1% fee on specific categories of transactions. It does not show up in the joining fee or the annual fee. It appears on your statement as a separate line, with 18% GST on top, weeks after you paid the electricity bill or the school fees. If you use one card for most household payments, this fee can wipe out the rewards you thought you were earning.
Why Banks Started Charging These Fees
Utility bills, rent, school fees and wallet top-ups have one thing in common: the merchant pays the bank a very low processing fee, or none at all, on these payments. At the same time, customers were using these categories to hit milestone targets and annual-fee waivers, and some were routing rent or wallet loads through cards to create interest-free cash. Banks responded by charging the customer directly once spending in these categories crosses a threshold. The fees are allowed as long as they are disclosed in the card's Most Important Terms and Conditions (MITC) and customers are notified before they take effect, which is what RBI's Master Direction on credit cards requires.
Bank-Wise Thresholds in 2026
The table below summarises the fee rules announced by the four largest issuers. Banks revise these often, so treat it as a starting point and confirm on your issuer's charges page before you plan a large payment.
| Category | HDFC Bank | ICICI Bank | SBI Card | Axis Bank |
|---|---|---|---|---|
| Utility bills | 1% once monthly utility spends cross ₹50,000 (₹75,000 on business cards); capped at ₹4,999/month | 1% on utility spends above ₹50,000 a month | 1% if utility payments exceed ₹50,000 in a billing cycle | 1% once cumulative utility payments reach ₹25,000 in a statement cycle |
| Wallet loads (Paytm, Amazon Pay, etc.) | 1% on loads above ₹10,000 a month | 1% on loads of ₹5,000 or more (from early 2026) | 1% on loads above ₹1,000 | 1% once cumulative loads reach ₹10,000 in a cycle |
| Rent | 1% on every rent payment; capped at ₹4,999/month | 1% on rent payments | Processing fee applies; check MITC | 1% on rent payments |
| Education via third-party apps | 1% (direct payment to school or college is free) | 1% (direct payment is free) | 1% via apps like CRED, PhonePe, MobiKwik (direct is free) | 1% (direct payment is free) |
| Fuel | 1% above ₹15,000 or ₹30,000 per transaction, by card | 1% on fuel spends above ₹10,000 a month | Surcharge waiver rules vary by card | Surcharge waiver rules vary by card |
What the Fee Actually Costs You
One per cent sounds small, but it is charged on the full transaction and GST is added to the fee. A ₹60,000 school fee paid through a payment app costs ₹600 plus ₹108 GST, which is ₹708. Most cards earn between 0.5% and 2% in rewards, and banks increasingly exclude rent, wallet loads and education from earning rewards at all. In most cases, then, you are paying 1.18% for nothing more than the convenience and a few interest-free weeks.
| Payment | Amount | Fee | GST | Total extra cost |
|---|---|---|---|---|
| Quarterly school fee via app | ₹60,000 | ₹600 | ₹108 | ₹708 |
| Monthly rent | ₹25,000 | ₹250 | ₹45 | ₹295 |
| Wallet top-up on SBI Card | ₹5,000 | ₹50 | ₹9 | ₹59 |
| Annual rent via card | ₹3,00,000 | ₹3,000 | ₹540 | ₹3,540 |
Rent is the category where the damage adds up fastest, because it is charged on every payment regardless of amount. Our guide to paying rent with a credit card covers the platform fees you pay on top of the bank's 1%, which can push the total cost above 2%.
What About Gaming and Transport?
HDFC Bank and Axis Bank both announced 1% fees on online skill-gaming spends above ₹10,000 in a cycle, and ICICI Bank announced a 2% fee on gaming platforms from early 2026. In practice, the Promotion and Regulation of Online Gaming Act, 2025 banned real-money online games, so most of these platforms stopped taking money deposits. ICICI Bank has also announced a 1% fee on transactions above ₹50,000 under certain transport merchant codes. This mainly affects large travel bookings coded under transport rather than airlines.
How to Avoid These Fees
- Pay schools and colleges directly. Every major issuer exempts payments made on the institution's own website or at its campus card machine. The fee applies only when you pay through CRED, PhonePe, Paytm or similar apps.
- Split utility bills across cards. If one card is close to its threshold, move the electricity or broadband bill to a second card, or pay it by UPI from your bank account.
- Stop topping up wallets with a credit card. With SBI Card charging above ₹1,000 and ICICI from ₹5,000, a wallet top-up is almost never worth it. Pay merchants with the card directly instead.
- Recalculate your rent strategy. At 1.18% plus platform fees, paying rent by card only makes sense if it unlocks a milestone benefit worth more than the fee, and rent increasingly does not count towards milestones.
- Check which categories count for fee waivers. ICICI no longer counts rent, government payments and education towards annual-fee waivers and milestones, so these payments no longer help you reach them.
Taxes Paid by Card Follow Different Rules
Income tax and GST payments made with a credit card are charged by the payment gateway, not under these bank category fees, and usually cost close to 1% as well. See our guide to paying GST and income tax by credit card for the current gateway charges.
The Bottom Line
These fees are here to stay and each round of revisions has lowered the thresholds. Read the charges section of every notice your bank emails you, and keep at least two cards so you can move payments when one nears a limit. Wherever there is a free option, such as paying the school directly or using UPI from your bank account for bills, choose it over the card.