Do I have to pay the rent with a credit card?
Credit card are a convenient option for making everyday purchases, especially if you want to accumulate rewards points or cover expenses until payday. But there are some expenses that you usually can’t pay with your credit card, including rent. However, if your landlord doesn’t accept credit card payments, you can still pay your rent with a credit card through third-party payment services.
Billing your monthly rent to a credit card can be convenient, but it’s important to consider the pros and cons first. Here’s what you need to know to decide if this is the right decision for you.
How to pay rent with a credit card
There are two ways to pay your rent with a credit card. You can go directly through your lessor or use a third-party payment service.
Pay the rent directly to your landlord
If your landlord accepts credit card payments, you can submit your payment directly. Many landlords, especially large property management companies, have software set up to accept payments, either in person or online.
Before using your credit card to pay your rent, check with your landlord to find out if you will be responsible for the charges. For example, if a payment service charges a 3% processing fee, your rent payment of $1,500 will effectively become $1,545.
Pay rent through third-party services
If your landlord or property management service doesn’t allow credit cards as a payment option, you might consider using a third-party payment platform service to help pay your rent with your credit card.
- Plastic: Plastic is an online bill payment service that lets you pay rent with your credit card, and your landlord doesn’t need to have a Plastiq account. The company charges a 2.85% fee for credit card payments, and you can make payments manually or schedule them automatically for a specific time. Plastiq completes the transaction by giving your landlord a check or electronic payment.
- PlacePay: This online service allows you to split rental costs with roommates and pay rent using your bank account or credit card for a 2.99% transaction fee. You can also schedule automatic payments or pay whenever you want on your mobile device or desktop. When you submit your payment, PlacePay will deposit the funds directly into your landlord’s account.
- RentMoola: This platform offers you the opportunity to double your reward points. In addition to earning points when you pay rent with a credit card rewards, RentMoola also gives you the opportunity to earn points through MoolaPerks. Through this rewards program, you can redeem points for offers with shopping, travel and home service providers. RentMoola charges a 2.99% service fee when paying rent with a Visa or Mastercard and a 3.99% service fee when paying with an American Express card.
- PayPal: If your landlord has a PayPal account, they can allow you to pay rent using the PayPal app. You can make debit card or credit card payments through PayPal. While debit card payments are free, credit card transactions require you to pay a fee of 2.9% plus $0.30 per transaction.
- Venmo: Venmo is a peer-to-peer payment app that lets you send money to anyone with a Venmo account. If your landlord agrees to accept your rent payments through the Venmo app, you’ll incur a 3% fee to charge the rent to your credit card (or you can avoid a fee by paying with a debit card).
The benefits of paying rent with a credit card
Let’s go over the top three reasons why you might want to pay your rent with a credit card to better understand whether it’s a good idea or not.
Win time
If you’re short on money, you may be trying to avoid late payment fees or avoid eviction by charging your rent to your credit card. Keep in mind that borrowing to cover rent or other bills can become a risky habit if you’re not careful. Be sure to pay your credit card bill before the due date to prevent interest charges from accumulating. For this reason, using a credit card to save time should only be considered as a last resort, as it can lead to a cycle of debt.
Earn rewards
One of the benefits of paying rent with a credit card is that you’ll earn cash, travel, or other credit card rewards. If it’s cash back you search, you will usually find base reward rates ranging from 1% to 2%. If you charge a rent payment of $1,500 to your rewards card, you could earn $15 to $30 in cash back each month. Keep in mind, however, that you might end up paying more in processing fees, as third-party payment service fees are often over 2%.
Qualify for a welcome bonus
You might consider paying rent with your credit card to earn a new card launch bonus, especially if you wouldn’t qualify otherwise. For example, suppose you are approved for a credit card that offers a huge amount of bonus points after spending $4,000 on purchases within the first three months of opening your account. If you charge $1,500 per month in pay-per-view rent payments during those three months, you’ll end up spending a total of $4,500, which is more than enough to earn the introductory bonus. Of course, you’ll need a solid plan to pay off the balance by the due date each month to eliminate your debt and avoid costly interest charges.
The disadvantages of paying rent with a credit card
As with any financial decision, it’s good to weigh the benefits against the risks. Let’s review the following risks to determine if it’s worth paying your rent with a credit card.
Accumulation of debts
Although it is convenient to use a credit card, especially if you are in a difficult financial situation, it can lead to a vicious cycle of debt if you are unable to make your credit card payments. on time. Currently, the average credit card interest rate is about 16 percent. If your balance rolls over to the next billing cycle, the interest will add up quickly and likely wipe out any benefits you received from charging your credit card for rent.
Fees charged
If you use a third-party payment company to pay your rent, the processing fees you’ll incur could be substantial and could void any credit card rewards you earn. And, if you continue to pay through a payment service, your transaction fees will accumulate over time. For example, if you use Plastiq to pay your monthly rent of $1,500, you will be charged a fee of $42.75 each time (2.85%). This represents a considerable amount of $513 per year.
Risk to your credit
Paying your rent with a credit card will likely increase your credit utilization rate, which is the percentage of your available balance that you are using. Your credit utilization rate is important because it represents 30% of your credit score. People with high credit scores tend to have lower credit utilization ratios, and it’s a good idea to keep your ratio on each of your credit cards below 30%. To quickly determine your current ratio, see Bankrate Credit Utilization Ratio Calculator.
The bottom line
Can you pay your rent with a credit card? Yes, but that’s not always a good idea. If you can pay your credit card bill in full without accruing interest charges, and the value of the rewards is greater than the processing fees you would be required to pay, it may make sense.
However, if you are unable to pay your credit bill on time each month, paying your rent with your credit card could be a risky decision. Not paying off your balance on time could hurt your credit score and lead to a cycle of debt. Weigh the pros and cons based on your financial situation so you can make the best decision for your situation.