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For many people, the monthly rent payment is their biggest expense. In fact, according to recent data from the Pew Research Center and the U.S. Census Bureau, 46 percent of American renters spend at least 30 percent of their income on rent — and 23 percent of renters put at least 50 percent of their income towards their rent payment.
That’s a lot of money, which means you might be asking yourself whether it’s possible to pay your rent with a credit card.
Whether you’re hoping to earn credit card rewards on your rent payment or whether you’re looking to credit as a way to temporarily cover a payment you can’t make in cash, there are several reasons to consider paying rent with credit. There’s also at least one good reason to continue paying your rent the old-fashioned way.
What are the pros and cons of putting your rent on credit? We talked to two people who pay their rent with a credit card. Here’s what you need to know.
Paying rent with credit can help you earn rewards
“I like to pay my rent via credit card,” says Matthew Meier, founder of Las Vegas tour company MaxTour. “Paying rent with credit helps me meet the required spending minimums to get sign-up bonuses.”
Credit card sign-up bonuses are some of the most valuable rewards you can earn. And since the best sign-up bonuses can be worth as much as $750 or even $1,000, it’s a smart move to do whatever it takes to clear the minimum spending requirement. Paying your rent on credit is one way to get the job done.
Once you’ve earned your sign-up bonus, you might want to go back to paying your rent via check or direct debit — especially if the fees associated with paying your rent via credit outweigh the cash back, points or miles you might earn. However, some people decide that paying rent on credit is a good way to maximize their credit card rewards.
“Our apartment charges a 2.5 percent surcharge for using a credit card, but most of our cards get 2 percent cash back or points,” Meier explains. “This plus the huge bonuses we get make it very lucrative to pay our rent with a credit card.”
How to minimize fees when you pay rent with a credit card
Why do landlords charge extra fees for paying with credit? In some cases, your landlords are required to pay credit card processing fees in exchange for accepting rent payments on credit — and in many cases, they pass those fees directly on to you.
This is why it’s important to do the math before putting your rent on credit, especially because rent payments rarely qualify for credit card bonus category rewards. Instead, you’ll generally earn the lowest rewards rate on your rent payments. This means that you could be paying as much as 3 percent in fees to earn 1 percent cash back, which is a net loss.
One way to minimize fees is to take advantage of your credit card’s payment features. “I have the American Express Blue Cash Preferred® credit card and I pay my rent monthly using the card’s Send & Split feature,” says Alex Ward, a public relations expert and entrepreneur.
American Express Send & Split is an easy way to split payments with other Venmo and PayPal users. Send & Split also allows you to send money through Venmo or PayPal without paying the standard Venmo or PayPal credit card fee.
“I pay my landlord through Venmo,” Ward told us. If your landlord also accepts Venmo, Amex’s Send & Split could be a great way to pay rent with a credit card.
Another option to avoid credit card fees when paying rent
You can also avoid fees when paying your rent with a credit card if you use the Bilt Mastercard®. The Bilt card offers several fee-free ways to pay your rent using the Bilt app, including by sending a check directly to your landlord. You can also pay rent with the card through Venmo, PayPal or an online portal.
The card offers up to 1X points on rental payments on top of 2X points on travel and 3X points on dining purchases. So a $1,500 rental payment can earn you 1,500 points, and you get to skip the 2 to 3 percent processing fee that many rental portals charge for credit card transactions. According to Bankrate’s latest point valuations, Bilt points can be worth up to 2.2 cents per point, if you maximize their value with the Bilt Rewards program’s transfer partners. If you redeem your points toward your monthly rent, they’re only worth 0.55 cents per point.
Be aware that in order to maintain eligibility for 1X points on rental payments, you must have at least five posted transactions per billing cycle, or else you’ll only earn a flat 250 points for paying rent. If you were planning to pay only rent with this card and charge nothing else, its earning power becomes limited. If you plan to use the card at least five times each billing cycle, the Bilt card is worth considering as an addition to your wallet.
How to avoid debt when you pay rent with a credit card
If you pay your rent with a credit card, make sure you have a plan to pay off your credit card bill — otherwise, your monthly rent payment could turn into credit card debt.
Ward also uses Amex’s Pay It, Plan It® feature, which allows you to pay off large purchases like rent payments with a fixed monthly fee instead of compound interest charges. “Sometimes I use Plan It to stretch the rent payment over several months,” he explains.
Ward is able to take advantage of his credit card’s payment features to pay off his rent before it turns into long-term debt. If you’re able to do the same thing, it could be a good reason to pay your rent on credit — especially if you use an 0 percent intro APR card to carry a temporary balance without accruing interest charges.
No matter how you pay off your credit card bill, be aware that carrying a rotating credit card balance over time could trap you in a credit card debt cycle. So have a plan in mind before putting any large payments, including rent payments, on your credit card.
Your monthly rent payment could boost your credit score
Whether you decide to put your rent payment on credit or pay rent with a check, there are ways to use your monthly rent payment to boost your credit score.
If you put your rent payment on credit, the best way to improve your credit score is to pay your credit card bill in full every month. That way, you won’t get stuck with a credit card balance that could increase your credit utilization ratio and lower your credit score. Plus, your on-time payment history will prove to lenders that you can manage credit responsibly.
If you prefer to make your rent payment by writing a check or setting up a direct debit from a checking account, you can still use your monthly rent check to boost your credit. All you have to do is sign up with an alternative credit reporting service that reports rent payments to credit bureaus.
Experian RentBureau, for example, allows you to include monthly rent payments in your Experian credit report. And if you want to add your utility, telecommunications and streaming service payments to your credit report as well, consider signing up for Experian Boost.
The bottom line
If you’re using your rent payment to qualify for a credit card sign-up bonus or earn credit card rewards, putting your rent on credit could be a smart move. But before you pay rent with a credit card, make sure you aren’t paying more in fees than you’re earning in rewards. You’ll also want to pay your credit card bill in full before your rent payment turns into long-term debt. Otherwise, your biggest monthly expense could end up costing you even more money.