For those who pay rent to reside in their home, rent is often the biggest monthly expense. Whether you’re in a financial pinch during a particular month or you’re trying to maximize your credit card rewards points or cash rewards, you may be wondering: can you pay rent with a credit card?
The short answer is yes–paying rent with a credit card is possible in many instances. But there are follow-up questions to consider, such as: how do you do it and is it worth it?
Paying rent with a credit card is not as simple as making a retail purchase or paying for other services. That’s because credit card issuers have processing fees, and landlords or property management companies will likely pass along that cost to you. Transaction fees can add as much as 3% to your monthly rent, so you'll have to determine if using your card to pay is worth the extra cost.
There may also be credit score implications when you make a large payment with your credit card, because it could increase your utilization ratio. Plus, if you can’t pay your credit card balance in full every month, the rent payment will add interest charges to your bill.
Learn more about how paying rent with a credit card works, the pros and cons, and if it’s a good payment option to consider.
How to pay rent with a credit card
If you decide that you want to use a credit card to pay your rent, you’ll first need to determine how you can do it. If you’re renting from a large property management company, you will likely be able to easily use a credit card to make the payment. But what if you’re renting from a private homeowner?
To pay your rent with a credit card, start by asking your landlord if they offer that option. If they do, find out if there are any fees involved. Anticipate paying a processing fee, though this is something you’ll need to discuss with your landlord. You can then provide your card information if there’s an online payment portal or pay in person with your card.
If your landlord is adamant that they only accept checks or cash, there still may be a way around it. There are third-party services that let you pay for your rent on your card, and then they cut a check directly to your landlord on your behalf. You will pay a processing fee to use these services. Make sure to review and understand all the Terms and Conditions of this service.
What are the advantages of paying rent with a credit card?
Convenience
Compared to writing checks and making trips to the ATM to withdraw cash, using a debit card, credit card, or mobile banking app is simply more convenient. It also means you won’t have to deal with carrying large sums of physical money.
Build credit history
Typically, rent payments are not reported to the credit bureaus and therefore don’t appear on your credit report. As a result, all of those on-time payments you made are going unnoticed and not helping your credit score. If you pay with credit–and pay the credit card bill on-time and in full each month–it may help you establish a positive credit history.
Rewards and introductory benefits
Rewards credit cards sometimes offer a sign-up bonus also known as a welcome bonus if you meet a certain spending requirement within a short period of time. Typically, these bonuses provide you with a few hundred dollars if you spend a few thousand dollars in the first 60 to 90 days of opening the account.
If you spend beyond your budget to earn such bonuses, the resulting interest fees can negate the benefits, making it counterintuitive. What if you want to pay rent to earn ongoing credit card rewards, such as 1% or 2% cash back? This option may not be worth it because you’ll often pay a processing fee of around 3%, which outweighs the amount you would get back.
However, some credit card companies offer cards specifically designed for paying rent, and one of the major perks is that they typically waive the processing fee.
Financial safeguard
Credit card payments are generally very safe. For example, there’s zero fraud liability when you use them. Plus, if you schedule rent payments through your credit card company or use a third-party payment service, it can help keep your payments on time.
What are the disadvantages of paying rent with a credit card?
There are also cons to think about when choosing to pay rent with a credit card. It can add to your monthly cost because of fees and interest charges, and it may impact your credit score.
Interest charges
It’s a simple fact of owning a credit card that if you don’t pay your balance in full every month, you will need to pay interest charges (unless the card has an introductory period with 0% APR on purchases). If your balance includes a larger payment like rent, your interest charges may increase your debt level.
Fees
When you use your credit card to pay rent, you will typically need to pay an additional 3% fee for processing, which essentially increases your monthly rent total. As an example, if your rent is $2,000 monthly, you will pay an extra $60 per month, which equates to $720 over 12 months.
However, this is not a disadvantage you need to consider if you have one of the aforementioned cards that waives this fee.
Credit score impact
One of the biggest factors in the credit score calculation is credit utilization ratio, which is the percentage of available credit you’re using. This is why it’s better to keep your overall card balance lower. Adding a large payment like rent to your credit card may increase your utilization rate and can lead to a credit score decrease.
For example, if you have a $3,000 credit limit and your rent is $1,500, you’ll utilize 50% of your credit for that payment. Ideally, you want to try to keep your utilization below 30% to maximize your score.
Budgetary issues
If you’re in a temporary financial bind, paying your rent with a credit card for a month may be an option. However, if you often rely on credit cards because you’re struggling with your monthly bills, you may have a bigger personal finance issue to address. You may need to work with a professional who can help you budget better before you end up too bogged down in debt.
What are the other ways to pay rent?
You can pay rent in a number of ways besides using a credit card. It all depends on what your landlord allows, so you can start by inquiring about acceptable payment methods. Some options may include the following:
ACH transfer from your bank account to your landlord’s account.
Third-party payment platform that is linked to your checking account—fees may apply.
Cash or paper check.
Conclusion
Paying your rent with a credit card has its pros and cons that every individual must weigh before making this decision. For instance, it can make paying more convenient and help you out in a pinch, but there is also the typical processing fee that will make the payment more expensive.
Additionally, if you lean on your credit card to pay rent, it may eventually have a negative impact on your credit score or may lead to ongoing problems with debt. Before you use your card to cover your rent, consider the pros and cons outlined above.
