Today, it’s easier than ever to purchase nearly everything with a credit card, and even use credit to cover monthly bills and utilities. But one of the most common (and costly) expenses that consumers incur each month is often still limited to cash or paper check payments: rent.
Using a credit card to pay your rent can be a great way to make the process more convenient and even earn extra rewards or a credit score boost. But there are risks involved, including fees and additional debt balances.
Here’s everything you need to know about paying your rent with a credit card:
When should you pay rent with a credit card?
One common reason tenants may seek out ways to pay rent using a card is to earn rewards.
Making this large purchase each month using a rewards credit card can help add valuable points, miles or cash back to your account. If you open a card with a generous welcome bonus, charging a large rent payment to your card for a few months can also help you meet a minimum spending requirement needed to score the bonus.
If you are trying to leverage your rent payment for rewards, have a look at the numbers first. Processing fees for using your credit card to pay your rent could be upwards of three percent of your total charge. If you only earn two percent rewards for each dollar spent, you may actually be losing money. Make sure that whatever rewards you stand to earn are greater than the fees you must pay.
Additionally, your credit card can be a useful tool if you don’t have cash on hand one month and need a bit more time to cover your rent payment. Charging rent to your credit card can grant you time, but you should be careful not to get in the habit of making charges you can’t afford and running up high interest debt balances.
But if you’re diligent in paying off your balance without accruing interest, the biggest detriment to paying rent with your credit card is the potential fees. Determining how exactly fees may affect your rent payment can help you decide if using a credit card is the right choice for you.
How to pay your rent with a credit card
The most convenient way to pay your rent with a credit card is to make the payment directly with your landlord or management company, if available. This will likely be through an online portal your landlord has set up to accept payments, though your landlord may also prefer to use a payment app like Venmo.
If your landlord offers this option, make sure you ask about processing fees, which you’ll likely be expected to cover. Three percent may not seem like a lot, but if your rent payment is $1,000, an extra $30 per month in fees can quickly add up.
Many landlords don’t offer credit cards as a payment option to tenants, though. In that case, there are several third-party services that can help you use your credit card to make your rent payment.
When choosing a service provider, make sure you are working with a secure site that will protect your data. Here are a few examples of available services:
- Plastiq: This is a bill payment service that allows you to charge common bills, such as cell phone, utilities and rent to your credit card, then sends the payment to its recipient via check. Plastiq accepts most major credit cards and signing up for the service is free. Your recipient doesn’t have to have a Plastiq account to receive payment for a bill. Plastiq charges up to 2.5 percent per transaction.
- RadPad: RadPad offers a similar service to send a rent check to your landlord on your behalf. The site accepts major credit cards as well as Apple Pay payments, and there is a flat fee of 2.99 percent per credit card transaction. RadPad’s service also offers the option to set up regular monthly payments.
- RentMoola: RentMoola charges up to 3.99 percent per transaction, depending on the card you use. You can use this service for one-time rent payments or to schedule recurring payments, and if you prefer not to set up an account, RentMoola also offers a quickpay option that you can use with just your contact information.
Risks of paying rent with a credit card
Beyond taking on potentially costly fees, there are other risks you should consider before paying your rent with your credit card, especially when it comes to your credit score.
Having a large recurring payment on your credit card can significantly increase your credit utilization. The amount of credit you used in relation to the amount you have available is one of the most important factors in your credit score, and using more than 30 percent of your available credit in a billing cycle can have major consequences for your score.
Make sure the card you use for your rent has a high enough limit to accommodate the payment without reducing the credit you may need for other regular expenses or emergencies.
You should also ensure you have the cash to pay your rent off by the time your credit card statement is due. If you can’t pay your balance off in full, you’ll take on high interest debt which can quickly add up over time, but you must pay at least the minimum amount due on your card in order to avoid a late or missed payment hurting your credit score.
Best types of credit cards for rent payments
If you do decide that paying your rent with a credit card is a good option for you, make sure you’re using a card that will help you get the best return on your charges. Consider how details like the card’s rewards structure, annual fee and interest rate may affect your payment and look for a high credit limit to keep your credit utilization low. Here are some to consider.
General cash-back cards
Rent payments are not typically included under any credit card bonus categories. Instead, consider a general cash back card, so every dollar you spend will count towards your cash back.
For instance, the Citi® Double Cash Card has no annual fee, and you’ll earn 1 percent cash back as you spend, plus 1 percent as you pay off your balance for a total 2 percent cash back when you use your card. Another great option is the American Express Cash Magnet® Card, which offers a flat 1.5 percent cash back on all purchases for no annual fee.
Cards with a generous sign-up bonus
Making a recurring rent payment on your credit card is a great way to meet the spending requirements for a welcome bonus. Consider a card that earns rewards on your regular spending, then leverage your rent payment to score a welcome bonus.
If you value versatile rewards categories, such as dining, travel and popular streaming services, for instance, the Wells Fargo Propel American Express® card offers 20,000 bonus points after spending $1,000 in purchases in the first three months (worth $200 in cash back). Or, use the Citi Rewards+® Card to earn 15,000 ThankYou points after you spend $1,000 in purchases within three months of account opening, then enjoy rewards in everyday bonus categories plus the card’s unique roundup feature on all the rewards you earn.
The information about the American Express Cash Magnet® Card and Wells Fargo Propel American Express® card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.