Suppose you’re short on cash this month and in a bind about how to pay rent. One short-term option might be to pay rent with your credit card to preserve your cash on hand and keep a roof over your head.
Since most landlords and property managers do not directly take credit card payments, you’ll need to use a third-party app, like RentSpree, or a credit card processor like PayPal, which will charge you a fee to process your credit card payment, in effect increasing the amount you pay in rent. This approach can get you out of your immediate bind, but you’ll need to carefully manage your use of credit for situations like this to avoid a negative impact on your credit score.
What are the benefits of paying the rent with a credit card?
Although using a credit card to pay rent costs you more, you may earn benefits that outweigh the disadvantages. Before you choose to use a card for rent, evaluate potential benefits to determine if this approach makes sense in your situation.
Eliminate bounced checks– yes, your rent check can bounce, such as during a short gap between when your payment is supposed to be deposited and when the deposit actually hits your checking account. You eliminate the bounced-check risk if you pay with a credit card; you can send the payment through your processor and have it to the landlord within 1–3 days. If your rent checks bounce, you’re on the hook for both the bank’s NSF charge and what your landlord charges for a returned check and a late payment fee if your rent is late.
Gain convenience– Schedules don’t always match up, and you may not be able to go to the leasing office to pay before they close, or you may have a work trip planned when rent is due. Paying with a credit card allows you the flexibility of calling in a payment or sending it online at your convenience.
Earn rewards– Credit cards with rewards allow you to earn any purchase, even rent. Rent is usually a larger charge and would help boost your reward earnings each month. Review the terms your credit card company has about paying rent to ensure you will not be paying extra fees.
Secure your payment– Some third-party apps that process credit cards will guarantee your payment will be sent on time and pledge to cover any late fees or payment problems that originate on their end. Read the app’s fine print to find out about any extra fees they charge for such a guarantee, as it may only come with a specific level of service.
What are the disadvantages of paying rent with a credit card?
The convenience of paying rent with a credit card can come with disadvantages.
Ignore the budget– Using your credit card to pay rent as a stop-gap can work, but it can also lead to poor budgeting choices. For example, you could think you have the extra money in your account when your pay is deposited because you’ve already paid rent on the credit card. Don’t fall into the trap and pay your credit card right away.
Incur high fees– Third-party processing apps charge fees between 2–3% of the transaction cost. You’ll have to decide if those fees are worth it for convenience. If your rent is $1,500, the processing fee would be $30–$45. If using a credit card to pay rent becomes a continual habit, you could spend an extra $360–$540 over a year.
Adds interest expense– If you don’t pay your entire credit card balance each month, you'll incur interest charges which can quickly add up.
Increases your credit utilization ratio– Credit utilization is the amount of credit you use compared to the amount of credit you have available. A rent payment is a large charge that will likely affect your utilization. If your credit limit is $3,000 and your rent is $1,500, you’ll use 50% of your credit on housing alone; the standard advice is not to exceed 30% to avoid damaging your credit score.
What are the best credit cards for paying rent?
There are several credit cards to consider if you decide you want to pay your rent with a credit card.
Bilt Mastercard– This card allows you to pay rent without a transaction fee and earn one reward point per dollar on those transactions. It also offers two points for travel spending, three points for dining, and one point for all other transactions. You can use your points toward rent payments. The card does not have an annual fee.
To use: your landlord can charge your card through their payment processing service, or Bilt can mail them a check on your behalf.
American Express - Blue Cash Preferred® Card– This card is an earning powerhouse. You can earn a 6% cash back reward on groceries, 3% on transit and streaming services, plus 1% on all other purchases. When renting, the “Send and Split” feature works best. This feature allows you to split payments with Venmo and PayPal users and send money to your landlord without paying a credit card, PayPal, or Venmo fee. The card does have a $95 annual fee.
Chase Freedom Unlimited– This card has various cash back options, including 5% on travel, 3% on dining, 3% on drugstore purchases, and 1.5% on all other purchases, including rent. This card does not have an annual fee. You need a separate payment processor or a third-party app to pay rent.
Citi® Double Cash card– This card offers 2% cash back on every purchase, broken down to 1% on the purchase and 1% when you pay the bill. This card has no annual fee, but you will need a separate payment processor or a third-party app.
Should I pay rent with a credit card?
You could pay rent with a credit card if you’re in a financial position to pay your credit card bill in full each month; using a card will bring you flexibility and convenience. The flexibility comes in knowing you can pay rent on time and pay it back anytime during the month. However, if you have trouble managing your budget and are not great at setting aside the money to pay the credit card bill, you could be setting yourself up for credit failure and hurt your credit score.
Does paying rent with a credit card affect my credit score?
Paying rent with a credit card can boost your credit score or reduce it; it depends on how well you manage your payments. If you pay your rent by credit card each month and set aside the funds to pay your bill in full, you can improve your score with consistent, on-time payments. If you fall behind or max out your available credit and start to miss payments, you will negatively affect your score.
Boost your credit without paying rent with a credit card
Using a rent reporting service is one way to ensure your rent payments count toward building your credit. Rent reporting services report directly to the credit bureau on your behalf by verifying your rent payment with your landlord, so you get credit for your timely rent payments.
Pay rent online with rent payment platforms
These third-party services allow you to pay your landlord using a credit card and have your rent reported simultaneously.
- Venmo– This third-party platform allows you to send money to anyone for just about anything. You can debit the transaction from your bank account for no fee or pay 3% of your rent to charge your credit card. You can even use it to pay rent if your landlord accepts rent payments from Venmo.
- PlacePay– This online service allows tenants to split costs among roommates and pay rent by debiting a bank account or credit card. Each roommate would need a PlacePay account. Credit card or debit transactions cost 2.99%.
- RentMoola– This service offers MoolaPerks when you pay rent with a credit card, which can be redeemed for travel, shopping, and other purchases. Your property manager or landlord will need to approve the service. It costs 2.99% to process most cards and 3.99% for American Express.
- RentSpree– RentSpree has a tenant platform that creates a secure way for tenants to pay online directly to their landlord, apply for multiple apartments with one application, and go through the tenant screening process all in one place. RentSpree will soon offer a rent reporting service to allow tenant's rent payments to be reported to the credit bureaus and build their credit score.
If you have confidence in your money management skills, you can pay rent with a credit card and earn valuable rewards. For many tenants, however, the goal is simply to have their rent payments reported to the credit bureaus to help them build their credit. To help tenants, RentSpree will soon offer a rent reporting service as a better alternative to paying high transaction fees, maxing out your credit utilization, and negatively affecting your credit score.