There are many reasons why you might consider paying your rent—one of your biggest monthly expenses—with a credit card.
You can earn points or get money back if you pay with a bonus credit card. Perhaps you are working on meeting the minimum spending requirements for a big welcome bonus? Or you won’t be able to afford this month’s rent, and by borrowing it, you can buy yourself some more time.
Whatever the reason, I’ll tell you how to pay rent with a credit card. I’ll also go over the main considerations to help you decide if it’s worth it.
How to pay rent with a credit card?
Whether you are renting an apartment, condo, or single-family home, you first need to check if your rental agency or landlord accepts credit cards as a form of payment.
Property managers who use online portals make it clear to tenants if credit cards are allowed.
If you can pay by credit card, processing fees may apply. While this fee may seem relatively low, it can still increase significantly if your rent is costing you thousands of dollars each month.
Otherwise, some rental properties may not accept credit cards at all. You may be limited in paying rent with a debit card; online settlement account; or with an old-school written check instead.
Despite this, you can pay your rent with a credit card using other tools.
Bilt Rewards Mastercard
The Bilt Rewards Mastercard is an annual fee-free credit card that’s specifically designed to earn points on your rent—and no processing fees.
The Bilt Rewards Alliance has over two million rental properties across the country, allowing you to pay your rent and earn points exclusively through the Bilt app.
But for tenants who can’t pay by credit card or want to avoid handling fees, Bilt will issue a rental check (on your behalf) directly to your property manager. This means that virtually anyone can earn rental points by carrying a Bilt Rewards Mastercard.
Bilt has a number of other benefits besides being able to pay rent without commission. Highlights include 3 points for meals, 2 points for travel, 1 point for everything else (including rent), mobile phone protection, and more.
Plastic
If applying for another credit card is out of the question for you, Plastiq is a third-party payment platform that can serve as a good alternative to the Bilt card.
With this service, you can pay rent and other expenses where a credit card is not traditionally accepted. Like Bilt, Plastiq will deliver a check or electronic payment directly to your landlord.
The processing fee is 2.85%, so you should probably only use Plastiq if you’re trying to meet the spending requirements for a huge signup bonus, or if you absolutely need the extra payment flexibility that a credit card gives you.
It’s also worth noting that Plastiq charges the lowest processing fees compared to other competing services such as RadPad or PlacePay.
The best credit cards for paying rent
The Bilt Rewards Mastercard mentioned above is an innovative product specifically designed to earn rental rewards. This is a great choice for renters who want to avoid handling fees or have a landlord who may not accept credit cards at all.
But if you’re a lucky renter who’s allowed to use a credit card with no additional processing fees, you can compare the Bilt Rewards Mastercard to other high-value cards on the market. I have selected the best credit cards to pay rent based on the welcome bonus, recurring rewards and other benefits they offer.
| Bilt Rewards Mastercard | Pursuit of Unlimited Freedom® | Capital One Venture Rewards Credit Card | |
|---|---|---|---|
| Loan required | Good to Excellent | Good to Excellent | Good to Excellent |
| Annual fee | $0 | $0 | $95 |
| April Introduction | N/A | 0% per annum on purchases and balance transfers for 15 months | N/A |
| Regular APR | 16.49% – 24.49% variable per annum | 15.74% – 24.49% Variable variable annual interest rate | 17.49% – 25.49% (variable) |
| Bonus for registration | N/A | Get an additional 1.5% refund on everything you buy (up to $20,000 in the first year) – up to $300. | Earn 75,000 bonus miles by spending $4,000 on purchases within the first three months of opening an account. |
| Awards | 3x food points; 2 times more points for the trip; 1x points for rentals and all other purchases. | 5% cashback on trips booked through Chase Ultimate Rewards; 3% for purchases in restaurants and pharmacies; unlimited 1.5% refund on all other purchases. | 5x miles on hotels and car rentals booked through Capital One Travel, and 2x miles on all other purchases. |
| Advantages and Benefits | Extended warranties, trip and cancellation insurance, mobile phone coverage and more. | Trip cancellation and disruption insurance, no commissions for overseas transactions, etc. | Two complimentary visits to the Capital One Lounge per year, extended warranty, accident insurance, and more. |
Benefits of paying rent with a credit card
Paying your rent with a credit card can help you earn a signup bonus
Surprisingly, charging a credit card processing fee when renting can sometimes make sense. Paying huge expenses, such as rent, can help you quickly reach the required spending amount to qualify for a new credit card signup bonus, which can be worth more than the processing fee.
For example, the Chase Sapphire Preferred Card offers 60,000 bonus points after you spend $4,000 within the first three months of opening an account. These points are worth at least $750 for travel purchases.
According to Statista, the average cost of a one-bedroom apartment in the US is $1,129 per month. In this case, the Plastiq processing fee will cost you $32.18. That pales in comparison to $750 in travel rewards.
Rent payments can improve your credit score
Five factors affect your FICO credit score (percentages are approximate):
- Payment history: 35%
- Credit usage: 30%
- Length of credit history: 10%
- Credit diversification: 10%
- New credit: 10%
Payment history is one of the key components here. Essentially, a responsible payment history tells creditors that you can pay your bills on time.
By paying your rent with a credit card and practicing consistent and timely payments, your billing history will improve and help you gradually increase your credit score.
However, while making regular, timely rent payments can positively impact your payment history, it will increase your credit utilization at the same time. (See “Disadvantages” below).
Read more: How credit ratings work
Credit cards can offer you payment flexibility
Credit cards usually offer a grace period before the due date. By charging your rent with a credit card, you get a little more time than if you pay with a debit card or checking account.
However, it is imperative that you pay off your account in full within this grace period. Otherwise, you will have to pay high credit card interest and late fees and you may start accumulating debt.
Disadvantages of paying rent with a credit card
Subject to high processing fees
If your credit card offers a 1% cash back and you use it to pay $1,129 in rent every month, that adds up to $135.48 in accumulated cash by the end of the year. Sounds like a good dose of change, right?
But don’t forget the processing fees you’ll likely have to pay to facilitate these credit card transactions. In the scenario above, Plastiq’s processing fee of 2.85% is $386.12 in cumulative fees for the year. This is a loss of -$250.64 compared to the cashback you would have earned.
Other credit cards may offer more cash or reward points with a higher value depending on how they are used. As a general rule, you always need to weigh the value of the rewards you earn against the price you will pay for processing fees.
Increased use of credit
Paying rent with a credit card is a double-edged sword when it comes to your credit history.
Remember that your credit usage — or the ratio of your debt to total available credit — is 30% of your FICO credit score. And making huge rent payments each month can lead to a dramatic increase in credit usage.
Let’s say you have two credit cards; one with a $1,000 limit and the other with a $2,000 limit. In total, you have a loan of $3,000.
Paying $1,129 rent on a credit card uses up about 38% of your total credit limit, which isn’t ideal. In general, you want your credit utilization ratio to be as low as possible – preferably below 30%.
The risk of taking on debt
When you’re short on cash, paying your rent with a credit card can seem like the perfect temporary solution to buy you more time until your cash flow situation improves. But it should be a one-time last resort, not a repeat offence. And you will need a plan to pay off your card balance as quickly as possible.
If your credit card has an interest rate of 15% and you only make the minimum rent payment of $1,129, it will take you about five years to pay off that amount, in which time you will shell out more than $500 in the form of percentages. It’s a trap you don’t want to fall into.
If you find yourself running low on cash on a regular basis, instead of charging your credit card for rent, it might be time to:
- Consider downsizing to cheaper living conditions, or;
- Adjust your budget to properly cover your monthly rent.
Read more: How much of your income should you spend on rent?
Summary
Paying your rent with a credit card has become easier in recent years, thanks to products like the Bilt Mastercard or services like Plastiq.
As with any credit card purchase, paying rent with a credit card can be a smart decision if you: A. Strive to pay your card statement on time and in full, and B. Get more rewards/cash than you. re-payment of processing fees.
