{"id":18388,"date":"2023-08-25T15:37:10","date_gmt":"2023-08-25T19:37:10","guid":{"rendered":"https:\/\/www.renthop.com\/blog\/?p=18388"},"modified":"2023-08-25T15:38:59","modified_gmt":"2023-08-25T19:38:59","slug":"can-you-pay-rent-with-credit-card","status":"publish","type":"post","link":"https:\/\/www.renthop.com\/blog\/can-you-pay-rent-with-credit-card\/","title":{"rendered":"Pros and Cons of Paying Rent With A Credit Card"},"content":{"rendered":"

The first day of the month sticks out for many tenants as time to pay rent. This monthly expense is one of the largest costs for renters and can place a great financial burden on tenants. If you’re looking to build your credit score<\/a>, you can pay rent with a credit card. However, there are risks associated with paying your rent this way. Before you pay rent with a credit card, you should know how it impacts your credit score and your budget.<\/span><\/p>\n

How credit payments work<\/span><\/h2>\n

When first using a credit card, it may be tempting to use it often to build a credit history. Before you decide to use your credit card, it\u2019s important to understand how credit works.<\/span><\/p>\n

When using a <\/span>credit card<\/span><\/a>, you are loaning money from the bank or card issuer to complete a transaction. You then must repay the loan to the card issuer in the form of full or monthly payments, with any remaining monthly balance accumulating interest. Interest rates vary depending on what credit card you have, and some cards have lower interest rates when you first sign up. Most credit cards incentivize users with rewards such as airline points, cash back, or low interest. Some credit cards offer cash back for certain types of purchases (such as gas, groceries, or rent).<\/span><\/p>\n

Pros of using a credit card to pay rent\u00a0<\/span><\/h2>\n

Paying rent with your credit card has many advantages. Credit card payments are convenient and quick (much faster than mailing in a check), and it\u2019s a great way to build credit and earn rewards.\u00a0<\/span><\/p>\n

Rewards for minimum spending<\/span><\/h3>\n

Many credit cards offer reward bonuses when you sign up and meet <\/span>minimum spending requirements.<\/span><\/a> While it may seem daunting to charge hundreds (or thousands) of dollars to a credit card each month, using your rent payment can help you meet the minimum spend requirement and gain rewards such as airline points, cash back, or special bonuses.\u00a0<\/span><\/p>\n

Points, miles, and cash back galore!<\/span><\/h3>\n

Even if there isn\u2019t a minimum spend requirement on your credit card, most credit cards offer cash back or points. You can save up points to buy an upcoming flight or earn cash back by charging rent to your credit card.\u00a0<\/span><\/p>\n

Financial security<\/span><\/h3>\n

Some tenants use their credit cards to pay rent despite having the cash in the bank. Others can pay rent with a credit card and provide coverage when waiting on a paycheck or in a time of financial insecurity.<\/span><\/p>\n

Building credit history and improving your score<\/span><\/h3>\n

Any time you use a credit card, you build credit history. Paying your bill on time and in full is one of the best ways to improve your credit score. If you already have the cash for rent but are looking to improve your credit score, charging rent to your card and then immediately paying it off can raise your rating.\u00a0<\/span><\/p>\n

Never make a late payment again<\/span><\/h3>\n

Late rent payments can come with the sting of a late fee; if you\u2019re prone to forgetting to pay on time, third-party services such as find services allow you to schedule out payments in advance.\u00a0<\/span><\/p>\n

Cons of using a credit card to pay rent\u00a0<\/span><\/h2>\n

Paying rent with a credit card can earn rewards, build credit history, and offer financial security, but can also come with hefty fees and credit score damage if you aren\u2019t careful.<\/span><\/p>\n

Landlord\u2019s restrictions<\/span><\/h3>\n

While there are third-party services that can help circumnavigate a landlord who doesn\u2019t accept credit card payments, this method doesn\u2019t always work. Some landlords won\u2019t accept third-party transactions or credit payments. You can check your lease to see if there are any restrictions regarding methods of payment, or if you have questions, ask your landlord.\u00a0<\/span><\/p>\n

Processing fees<\/span><\/h3>\n

One of the biggest cons to using a credit card for rent is the processing fees for this type of payment. If you pay $1000 in rent, processing fees could cost you an extra $30 monthly. These fees can outweigh any cash back or reward advantages, so be sure to check both your credit card\u2019s cash back policy and the percentage of fees taken out for processing rent payments via credit card to determine if it is fiscally advantageous. One exception to this is the <\/span>Bilt Mastercard<\/span><\/a> \u2014 this card has a $0 annual fee and earns rewards without charging you transaction fees for rent payments.\u00a0<\/span><\/p>\n

Interest payments<\/span><\/h3>\n

If you charge rent to your credit card but cannot pay it off in full, you will pay interest on the remaining balance. Interest adds up quickly, and you could pay more than the original payment over time.\u00a0\u00a0<\/span><\/p>\n

Budgeting problems<\/span><\/h3>\n

While it may be tempting to use your credit card for rent so that you can spend cash on other things, this financial habit is a slippery slope. Credit card charges and interest payments, may leave you in poor fiscal health.\u00a0\u00a0<\/span><\/p>\n

Limited credit<\/span><\/h3>\n

While some cards offer high credit limits, first-time credit card users often begin with low credit limits. This is perfectly normal, but your low credit limit may not cover the price of rent. Over time, your line of credit can increase to cover more costs per month.\u00a0<\/span><\/p>\n

Negatively affecting your credit score<\/span><\/h3>\n

While paying rent with a credit card could build your credit history and improve your score (especially when using select services like <\/span>RentTrack<\/span><\/a>), paying with a credit card can also increase your <\/span>credit utilization ratio<\/span><\/a> (the total amount of debt you hold compared to your credit limit). For example, if you have a $5000 credit limit but charge your $2,500 rent payment to your card, your credit utilization ratio is 50%. This ratio is a determining factor of your credit score. You should aim to keep your ratio at or below 30%. If you have a low credit limit, it might not be wise to charge thousands of dollars to your card.\u00a0<\/span><\/p>\n

Ways to pay rent with a credit card<\/span><\/h2>\n

If you decide to pay rent with your credit card, there are multiple ways to pay. Some landlords will accept credit card payments directly. If your landlord requires a mailed check, you may want to consider a third-party service.\u00a0<\/span><\/p>\n

Paying directly through your landlord or management company<\/span><\/h3>\n

Many landlords won\u2019t accept rent payments with a credit card \u2014 they require a direct deposit or mailed check. Those who do accept credit card payments may charge a processing fee. Depending on what type of credit card you have, this processing fee could outweigh the benefit of points or cash back rewards. If your landlord doesn\u2019t charge a processing fee, a credit card can help earn rewards and build credit. When you’re in a financial pinch and need to use the card one time, you can try asking your landlord for a fee exemption.\u00a0<\/span><\/p>\n

Third-party services<\/span><\/h3>\n

If your landlord doesn\u2019t accept credit card payments, you can consider using a third-party service to navigate around any restrictions. There are multiple options for these services, some of which need your landlord\u2019s involvement and some that don\u2019t.\u00a0<\/span><\/p>\n