- Paying rent with a credit card is possible, but it has several advantages and disadvantages.
- Any method you use to pay rent with a credit card will cost you extra money in the form of interest or fees, which are only worth it if you get better rewards.
- If you’re having trouble with rent, you can try working with your landlord on a payment plan.
Every month, your rent takes up a big chunk of your bank account. Putting that money on your credit card can be useful for delaying actual payment or accumulating rewards, but you should be aware of the potential downsides. Here’s what you need to know.
Can you pay the rent with a credit card?
The short answer is yes, you can pay the rent with a credit card. But that will largely depend on your landlord and the payment methods they accept. So you’ll need to call your landlord to see if that’s an option – or you can visit their online portal to see your options there. Either way, you’ll also want to make sure it’s clear what types of charges you might face if you choose this option, which will be covered later.
How do I pay rent with a credit card?
If you are renting from a property management company, you will most likely have access to a web portal that will accept digital payments, including credit cards. These payments are made through the Automated Clearing House (ACH).
Some landlords may restrict which credit cards they accept or can only accept, but “overall, most of them are all accepted if credit card payments are accepted,” says Lily Liu, founder and general manager of Pinataa tech startup that reports rent payments to the three major credit bureaus.
On the other hand, if you are renting from a small landlord like a family landlord or sole proprietor, you are very unlikely to have access to this payment infrastructure. Instead, you’ll have to go through third-party platforms that act as middlemen, accepting your credit card transaction and depositing it directly into your landlord’s bank account or sending them a check.
Regardless of how you pay rent with a credit card, you’ll end up paying an additional processing fee to do so. Most processing fees are just under 3% of your monthly rent. Applied to $1,322, the average monthly rent for an apartment in the United States from February 2022, you will pay an additional $39.66 each month.
If neither of these options suits you, you can also indirectly pay the rent by taking out a cash advance on your credit card. You’re basically borrowing money from your credit card, which you can use to pay your rent. This can be useful if your payday is after your rent is due or in other scenarios where you don’t have cash when your rent is due.
It’s only really pragmatic if you know for sure that you will be able to settle the cash advance in a short period of time since the APR on cash advances can be as high as 25% with no grace period. With no grace period, you start earning interest immediately after taking out the loan.
Advantages and disadvantages of paying rent with a credit card
Having the ability to pay rent with a credit card is a question. Whether you should is another question — the answer to which depends on your reasoning for paying rent with a credit card.
If you’re trying to pay rent with a credit card to get rewards on your card, you need to consider the additional costs and whether they outweigh the potential benefits. This could mean having a cash back bonus credit card with a higher percentage than your processing fee. You also need to factor in accrued interest on your credit card, although this shouldn’t be a problem if you pay off your debt within the grace period.
“Use the card when you know you’ll have the funds at the end of the month to pay for the card,” says Liu. “Otherwise what you just did was use a credit card for a major life expense that you can’t afford to pay properly, and now it’s sitting on your card. You’re earning interest on a very high transaction on this card.”
Other Options for Paying Rent
If you’ve determined that the pros of paying rent with a credit card outweigh the cons, there are other alternatives, though they come with their own caveats.
take out a Personal loan: Personal loans are probably not the best option for paying rent, but it is possible. These can be useful if you find yourself temporarily without income, such as if you are changing jobs. However, consider that the debt on these loans will also come with interest and your credit score will be affected by the serious investigation triggered by your loan application.
Borrowing money from family or friends: If you need the rent money right away, instead of going through a financial institution, you might want to talk to your loved ones. Hopefully, your friends and family won’t charge you interest or processing fees.
When you borrow money from a bank or other financial institution, you are borrowing against your credit. When you borrow money from a loved one, you are borrowing against your relationship with them. You need to make sure that you will be able to repay it.
Talk to your landlord: If you’re having trouble paying your rent, it’s best to be upfront with your landlord about your situation. “We always recommend building a relationship with the person you’re renting from,” Liu says. You can find a payment plan in the event of an emergency where you are temporarily unable to pay the rent. If the issue is timing, your landlord can be flexible about when you pay your rent.
“As long as you can create some clarity and alignment with who you’re hiring with, you can actually build a plan… Maybe there’s a little extra associated with it, but at least it gives you the ability to have that extra time,” Liu said. “At the end of the day, there is someone on the other side of this transaction.”