Pay Rent With a Credit Card: How To Do It, Cost & More
Yes, you can pay your rent with a credit card. In fact, according to a survey conducted by Demos, an estimated 40% of middle to low-income households use plastic to pay for their rent, along with other basic living expenses. Many consumers also look to credit cards not only as a way to foot rent costs in the interim, but also due to the fraud protection plastic provides and the ability to supercharge rewards earnings.
But, does the fact that you can pay for rent using credit mean that you should? We’ll examine the pros and cons of doing so below, in addition to outlining the ways you can pay rent with and without a credit card.
Pros & Cons of Paying Rent With a Credit Card
Before you decide to pay rent with plastic, make sure to consider the advantages and disadvantages of doing so:
- Earn Rewards – Paying your rent with a rewards credit card will enable you to amplify your earning capabilities with a significant expense each and every month. Such large charges will also be extremely useful when it comes to meeting the initial spending requirement to qualify for a rewards bonus. Just make sure any fees you’re charged for paying rent with plastic don’t outweigh the perks of doing so.
- Convenience – Maybe you won’t be in town the week rent is due or you’re not able to get to the leasing office during business hours. Paying with a credit card by phone or online offers the convenience and flexibility that many other forms of payments lack.
- Safety Guarantees – Some third-party apps guarantee that your payment will reach the property manager on time and will cover any late fees or other costs associated with payment problems. After all, you’re trusting them with the roof over your head. For example, here is RadPad’s guarantee below:
- Financial Coverage – It doesn’t matter if you’re short on money this month – your property manager will still want your rent. So, unless you have a willing friend or relative who can foot your bills in the interim, using a credit card is your next best option – especially if you can pay it off in full during the grace period.
- No Bounced Checks – Imagine you write your rent check and your landlord doesn’t cash it for two weeks. By that time, you’ve depleted some of the funds in your bank account and the check either bounces or triggers an overdraft fee. Paying with a credit card helps you avoid such a scenario.
- High Fees – The cost of using a third-party app to pay your rent with a credit card typically hovers around 3% of the transaction. That’s paying a lot for the convenience of using plastic.If your rent is $1,300, for example, then the fees amount to nearly $40. If you pay your rent with an app every month, you’d be spending around $480 on fees each year. With that being said, the best rewards cards offer 2% cash back across all purchases, so you’d really end up costing yourself $168.
- Limited Credit Line – Paying for rent with a credit card may be an extremely impractical option for consumers with limited or bad credit history, as they will most likely have low card limits. However, those with secured credit cards do have the option of adding to their deposit to extend their credit line enough to cover rent.
- High Credit Utilization Ratio – Given that rent payments are typically such high charges, they might negatively affect your utilization ratio and damage your credit score. Again, individuals with limited or bad credit history will be affected by this more, as the combination of their low credit lines and the high cost of rent renders them especially vulnerable to high utilization.For example, if your credit limit is $4,000 and your rent is $2,000, you’ll use 50% of your spending potential on housing alone. Given that we caution against exceeding 60%, you’d be in danger of compromising your credit score by paying your rent with your credit card.
- Potential Budgeting Issues – If you begin using a credit card to pay rent, you may be tempted to use the extra cash you have on hand. This could set you back when it comes to your financial goals (e.g. college fund, retirement), or even lead to expensive debt.
- Interest Expense – If you carry a balance on your credit card, you’re going to pay interest on all of your credit card charges, including your rent payments. Considering that rent is probably your biggest regular expense, these interest charges can add up quickly, unless you have a 0% APR card.
How to Pay Rent With a Credit Card
First, check with your property manager or landlord to see if they’ll accept credit card payments. If so, the cost will range anywhere from free to $70 per payment. If not, you can always try to convince them by arranging to pay for your rent a couple of months in advance or reminding them of how many would-be late payments they’ll avoid. This would result in a win-win situation for both parties.
If your property manager or landlord refuses to accept credit card payments or if their system is prohibitively expensive, there are still other ways to pay with plastic. We’ve broken them into two categories: those involving third-party apps and others that don’t. Take a look below:
|Name||Fees Charged||How It Works||Does Your Landlord Need To Be Onboard?|
|RadPad||2.9%||RadPad accepts your credit card payment, and delivers a check to your landlord for you.||No|
|RentPayment||Varies depending on property. Some are free while others typically fall between $40-$70.||RentPayment requires both you and the landlord to have accounts with them. They accept your credit card payment and transfer it as a direct deposit into the landlord’s linked bank account.||Yes|
|RentShare||2.9%||RentShare takes your credit card payment and mails a check on your behalf.||No|
|Rent Track||2.95% or free (landlord has the choice to cover the fee for you)||Rent Track provides a payment service for landlords, allowing them to accept online credit card payments from tenants.||Yes|
|ClickPayRent||2.95% or free (landlord has the choice to cover the fee for you)||ClickPayRent accepts your credit card payment and transfers the funds to your landlord as a direct deposit, given that both you and your landlord have registered accounts with them.||Yes|
|Venmo, PayPal, etc.||Typically around 2.9%-3%||These money-transferring tools can be used to transfer any kind of payment. They require both the sender and recipient to have accounts, each of which is linked to the user’s bank or credit card account.||Yes|
Other Methods to Pay With a Credit Card
- Cash Advance: You can take out a credit card cash advance (either as a convenience check or an ATM withdrawal) – however, note that credit card cash advances have very high fees and interest rates.
- Balance Transfer: This method is targeted towards individuals who have too many expenses to cover and too little cash on hand. Though you won’t be paying your rent with a credit card directly, you can shift some of your other expenses onto a credit card (via a balance transfer), leaving more available cash to pay your rent.
Alternatives to Paying With a Credit Card
If you don’t have a credit card – or you do, but aren’t keen on adding a hefty processing fee to your already-expensive rent bill – there are obviously a number of additional payment methods that will get the job done. For starters, the third-party payment apps listed above all work for debit cards as well, and the fees for those are always cheaper than those for credit cards (sometimes, they are even free).
You can also use one of the following methods:
- Do a Bank Wire Transfer
- Use a Debit Card
- Write a Paper Check
- Pay in Cash
- Pay with a Money Order
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