How to pay rent with a credit card

There are many reasons to consider paying your rent with a credit card, and more than one benefit may apply. For example, this gives you some time before the actual payment, and you can even roll over the balance from one month to another if you need to. This means that if you’re past due on rent or paying soon, paying with a credit card can help you catch up and keep a roof over your head.

At the same time, paying rent with a rewards credit card can help you earn cash or travel points for the money you spend on housing each month. And a few months of rent may even be enough to reach the spending threshold for a generous credit card sign-up bonus.

But how exactly can you pay your rent with a credit card? And is it always possible? Read on to find out how it works, as well as the various strategies you can use to make it happen.

How to pay rent with a credit card

You may have to pay additional fees or jump through some hoops to pay your rent with a credit card.

Here are some of the strategies to consider, as well as some of the extra steps and associated costs.

Ask your landlord if you can pay with plastic

First, ask your landlord if you can charge rent. Some already have payment acceptance software set up, so all you have to do is provide your account information and your card will be charged. Large property management companies are more likely to accept credit cards than individual landlords, but it’s worth doing.

Please be aware that there will be a processing fee, which is typically between 2.5 and 3.49 percent of the transaction amount. The landlord will likely pass these costs on to you, although it doesn’t hurt to ask if they will cover the fee.

For example, if your rent is $1,800 and the fee is 2.99 percent of the transaction, the additional cost is $53.82. If the minimum credit card payment is 2 percent of the balance, your payment will be $36. Add to that the commission and all you have to pay for the first month is $89.82 – a far cry from the $1,800 owed.

If your landlord doesn’t accept credit card rent through a major program, they may allow you to temporarily send money through an app like PayPal or Venmo.

In this case, you must set up the application, link your credit card to your account, and then complete the “payment” transaction:

• Find the name on your landlord’s profile.
• Click the “Pay” button.
• The money is debited from your credit card and sent to your landlord’s bank account on file.
• You will be billed for the amount of the transaction plus any fees charged to your credit card, such as cash advance fees, if applicable.
• The payment platform will charge its own fee. For example, PayPal charges a convenience fee of 2.9% plus 30 cents for sending money with a linked credit card.

Get a cash advance on a credit card

Another way to use a credit card to cover rent is to withdraw a cash advance. However, using your credit card for cash advances has serious implications, so you should make this method your last choice:

• The commission can be 5 percent of the amount you withdraw.
• Interest rates are often higher for cash advances than for purchases.
• Cash advances do not give you an interest-free grace period, so interest starts accruing from day one.

With this in mind, you should only use your credit card for cash advances if you have no other choice. Also make sure you have a plan to pay off the balance quickly after you borrow cash. Otherwise, the huge interest payments that start on the day you rent them out will make your rent much more expensive than usual.

Pay your rent with a third party company

There are several third party services that allow you to pay your rent with a credit card, albeit after paying a fee based on a percentage of the rent. One example is Plastiq.com, which allows you to pay by credit card for a 2.85% surcharge.

Other options include RentTrack.com and PlacePay.com, just to name a few. Some third party companies require your landlord to be on board to accept their payments, while others (such as Plastiq.com) will simply mail the payment to them after your credit card is charged.

Get a rental credit card

You can also get a credit card for rent, such as Wells Fargo’s Bilt Rewards Mastercard. This card was created to help people earn rental rewards and it also offers bonus rewards in other categories.

In particular, it allows you to earn 1X points on all rental payments up to $50,000 per year, as well as 2X points for trips when booked directly with an airline, hotel, car rental company or cruise company, and 3X points for meals. You can also earn 1 point for every dollar spent elsewhere, although cardholders must make at least five transactions during each credit period to earn these points. This card also comes with no annual fee.

In addition to earning rental rewards with this card, you can use rental rewards, home down payment, transfers to partner airlines and hotels, qualifying group fitness classes, and more.

Benefits of paying rent with a credit card

In addition to emergency assistance or being able to earn rent rewards, charging housing bills can have several other benefits:

Build and improve credit history

Charging regularly, making payments on time, and maintaining a zero balance are the fastest ways to establish a positive credit score. Rent is a necessary expense, so why not turn it into a high credit score?

Arthur Ruth, vice president of operations for Memphis Maids, a home cleaning service in Memphis, Tennessee, has been paying rent with his credit card for over 15 years.

“By using your cards this often, if you pay them correctly, you can save money and even improve your credit score,” Ruth says. “It’s something really important in our time.”

Freedom of cash flow

When Ny’Kesia Pannell, an Atlanta-based journalist and entrepreneur, was temporarily out of money, she took advantage of the credit card option.

“I was in between freelance gigs and had bills to pay,” says Pannell. “The fees were high, but at the time it was worth it.”

As soon as her financial situation returned to normal, she resumed paying by check.

Similarly, if your rent is due on the first of the month but your income is sporadic, you may need extra time to accumulate it all without any stress.

Your cash flow freedom can be even greater if you can charge rent from a credit card that offers a 0 percent original annual interest rate, as long as the purchase doesn’t show up as a cash advance. By securing 0 percent interest for a limited time, even a year or more, you will free up your cash flow and be able to pay off several months of rent if you can afford it.

Avoid late payments

If you don’t pay your rent on time, your landlord may charge you a late fee, which can be 5 percent of your rent or more.

It’s nice to be able to charge rent as an option if you’re having a particularly rough month. If you find yourself overstretched financially during the month, it will be cheaper to charge rent than to let it linger, and this will keep you from falling behind and ruin your relationship with your landlord.

Get a generous credit card signup bonus

In some cases, you may need to spend a lot on your card in order to receive a generous bonus offer. By charging rent from your credit card, you can reach your minimum spending threshold faster or even meet higher spending requirements to earn a bigger bonus overall.

In any case, it makes sense to pay an additional fee for using a credit card to pay the rent. As an example, let’s say you are trying to spend $4,000 within three months of opening an account to earn 60,000 bonus points on a Chase Sapphire Preferred Card. If you charge $4,000 in three months’ rent and pay a 3 percent fee for it, you can actually pay $120 to get a $600 bonus in gift cards or $750 on travel.

Cons of paying rent with a credit card

There are advantages to paying with a credit card, but there are also a few disadvantages to consider:

Fees

If you are responsible for credit card processing fees, you are at risk of increasing your monthly obligations. If your credit card reward value does not exceed the commission, you will lose money, not gain money.

To find out if this makes financial sense, look at your card’s rewards program and compare its income level to the transaction fees you’ll be charging. If the commission is 2.5% of the transaction amount and you earn 1.5% in cash, you will lose 1% every month. So for $1,500 rent, you’ll lose $15.

“It may not sound like much, but it adds up over time,” says Ande Fraser, former editor-in-chief of MyWorth, a media company specializing in financial education. “And if money is tight, [it will impact] what should you spend on [like] something significant.”

Credit card debt

As convenient as it is to rely on a solid line of credit when you need it, it’s also easy to take on extra loans. Pay attention to higher interest rates and low payments, because they will drive you into a deep hole.

“It’s a vicious circle,” says Frazier. “This debt will grow and grow, and the interest charged on it will be enormous. If you can’t afford the rent, you live in the wrong place.”

Credit damage

Credit scores take into account the amount of debt you owe and compare it to the amount you can borrow. If you reach your credit limit and your balance remains anywhere near it, your points will drop. Skip billing cycles and those numbers will drop even further.

This puts you in a terrible position if you have to move. Almost all landlords check credit reports to make sure you are a low-risk tenant. This way, if they see over-indebtedness and a system of missed payments, they may reject you on rent.

bottom line

In extreme situations, charging rent and then paying in installments can keep you in a positive position with your landlord. However, in order to avoid an uncontrollable increase in credit card debt, you need to pay as much as possible on the balance every month.

When life returns to normal and you want to keep collecting rent, make sure you always have money in your checking account to cover the payment when it’s time to bill.