Charging your rent isn’t such an outlandish idea, but it usually involves paying a fee. Here’s how to decide if it’s worth it – and how to do it right.
By Erica Sandberg Originally Published on CreditCards.com November 29th, 2021
In an economic emergency, covering even basic yet important expenses can be tough. Whether it’s a universal crisis (like a pandemic) or a personal financial emergency that has thrown a hurdle in your path, some months, rent can be tough. According to data shared by the National Multifamily Housing Council, as of Nov. 6, 2021, 21.8% of tenants had not sent full or partial payment for their rent. The NMHC’s rent payment tracker further shows that the percentage of people not making on-time rent payments has increased since the coronavirus pandemic began.
The last thing you want is to be evicted from your home because of nonpayment of rent. When you use it correctly, a credit card can help you through hard situations. Since the card issuer only requires a small minimum payment, it can buy you time before you get back on your feet.
Here’s how to charge rent, not just during a financial crisis but under normal conditions as well, advantageously.
How to pay through your landlord
First, ask your landlord if you can charge your rent. Some have software already set up to accept payments, so all you would need to do is provide your account information and your card will be charged. Larger property management companies are more apt to accept credit cards than individual landlords, but it’s worth an inquiry.
Bear in mind that there will be a processing fee, which typically falls between 2.5% and 2.99% of the transaction. The landlord will probably pass that cost to you, though it doesn’t hurt to ask if they’ll absorb the fee.
For example, if your rent is $1,800 and the fee is assessed at 2.99% of the transaction, the added cost would be $53.82. If the minimum credit card payment is 2% of the balance, your payment would be $36. Add the fee to it and all you’d need to pay is $89.82 – a far cry from the $1,800 due.
If your landlord doesn’t offer this option, consider explaining your reason for wanting to charge the amount. If it’s not a permanent change to the rental agreement (which spells out the method and timing of your payments), your landlord may allow you to send the money via an app such as PayPal or Venmo on a temporary basis.
You would set up the app, attach your credit card to the account, and then follow through with the “pay-to” transaction:
Locate your landlord’s profile name.
Hit the “pay” function.
The money is deducted from your credit card and sent to your landlord’s bank account on file.
You receive the bill of the transaction amount plus the fee from your credit card company.
Yet another way to use your credit card to cover your rent is to take out a cash advance. However, it comes with some serious consequences, so you should make this method your last choice:
Fees can be 5% of the amount you withdraw.
Interest rates are often higher on cash advances than they are on purchases.
There is no interest-free grace period, as there is for purchases.
How to pay through third-party services
An alternative to paying your landlord directly is to use a company that acts as an intermediary. The general process is simple:
Sign up with the company.
Identify your landlord.
Enter your rent amount and due date.
The company charges your card and sends your landlord the money in the form of a paper check or electronic transfer.
You receive a bill from your credit card company and send any amount that is at least the minimum payment.
You should have no trouble paying any landlord this way if the third party sends your rent with a paper check. It’s the same as if it were coming straight from your own checkbook.
If the company sends payments electronically, however, your landlord would need to register for an account so the money can be deposited.
But charging rent with a third-party company is becoming popular.
Eliot Buchanan, co-founder and CEO of the consumer-to-business bill-paying company, noticed a 50% increase in the number of Plastiq customers paying for rent with their credit card from 2018 to 2019.
“However, there are card processing fees involved, so rent payers should compare the costs and benefits of paying rent on a credit card to determine whether it makes sense to do [it] in their particular situation.”
Accepting credit cards for rent payments is a win-win, says Brian Davis, director of education for SparkRental.
“Landlords and property managers who accept rent by credit card offer more flexibility for their renters, with an option to stay current on their rent even if their bank account is short on the first of the month,” says Davis.
Review a variety of third-party companies before deciding on one, paying close attention to the fee structure and whatever unique benefits they may have.
|Third Party Service||Transaction Fee||Benefits/ Perks|
|Plastiq||2.85%||Up to 2% cash back on transactions, depending on your card.|
|RentMoola||2.99%-3.99%||Earn “MoolaPerks” for deals on travel, shopping, home service providers, etc.|
|SparkRental||2.99%-3.99%||Designed for landlords with a more challenging tenant base.|
|RentPayment||2.95%||Can pay via app, by replying to a text or by phone.|
|Apartments.com/ Cozy||2.75%||Can add low-cost renter’s insurance to the payment.|
Best credit cards to pay rent
Some rewards cards offer generous introductory bonuses. You can open an account for the specific purpose of using that bonus to offset the fees involved in charging your rent.
To get the bonus, you have to meet the card’s required minimum spend within a set time frame of opening the card. When you do, the reward is yours.
If you get cash back, you can use the money as a statement credit. For cards that give points or miles, you can trade them in for cash too, but you won’t get as much for them as you would for things like travel.
Whatever the case, the introductory bonus will nullify the amount you’re charged in fees when using your card for rent. After that, you’ll be earning rewards on purchases, which will also offset the fees, should you continue to charge your rent.
Just a few examples include:
|Rewards Credit Cards||Minimum Spend||Introductory Bonus|
|Blue Cash Preferred® Card from American Express||$3,000 in first six months||$300 statement credit|
|Citi Rewards+® Card||$1,500 in first three months||Earn 20,000 ThankYou points (redeemable for $200 in gift cards at ThankYou.com)|
|Chase Sapphire Preferred Card||$4,000 in first three months||60,000 points (redeemable for $750 toward travel when you go through Chase Ultimate Rewards)|
Another option is to open a credit card with 0% intro APR for an extended period of time.
You won’t be charged interest on the debt you carry over until the rate rises to the regular rate. Therefore, if you charge your rent and can only afford to pay the minimum, the debt won’t escalate with financing fees.
A couple of good examples include:
|0% intro APR credit card||Intro APR purchase period|
|Citi® Diamond Preferred® Card||12 months (13.74%-23.74% variable thereafter)|
|Discover it® Cash Back||14 months (11.99%-22.99% variable thereafter)|
Finally, you should know about a new platform designed specifically for paying rent: Bilt Rewards. You can pay your rent through the app and will soon have the option to pay with the Bilt Mastercard – with no added fees.
As you pay your rent with Bilt Rewards, you can earn points redeemable for things like travel, fitness classes, merchandise from the Bilt home decor and apparel catalog, your next month’s rent or a down payment if you decide to become a homeowner after renting. You’ll also get the added benefit of improving your credit score with each on-time rent payment.
Pros of paying rent with a credit card
Aside from helping you through an emergency, charging rent has a few other benefits:
Build and improve credit history
Charging regularly, paying on time and keeping the balance at zero are the swiftest ways to establish a positive credit rating. Rent is a necessary expense, so why not parlay it into a high credit score?
Arthur Ruth, vice president of operations of Memphis Maids, a house cleaning service in Memphis, Tennessee, has been paying rent with his credit card for over 15 years.
“Using your cards so much, if you pay them correctly, you can save money and even improve your credit score,” says Ruth. “That’s something really important in this day and age.”
Cash flow freedom
When Ni’Kesia Pannell, an Atlanta-based journalist and entrepreneur, was temporarily short on cash, she took advantage of the credit card option.
“I was in between freelance gigs and needed to pay bills,” says Pannell. “The fees were high, but at the time, it was worth it.”
Once her financial situation returned to normal, she resumed paying by check.
In the same vein, if your rent is due on the first of the month but your income is sporadic, you may need some extra time to accumulate it all without any stress.
Tip: Some of the credit card offers on this page may no longer be available on CreditCards.com, but you can still find a great card offer for you!
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Avoid late fees
If you don’t pay your rent on time, the landlord may charge you a late fee – which can be assessed at 5% of your rent payment or more.
“It’s nice to have the flexibility to charge your rent as an option if you hit a particularly tough month,” says Davis. “If tenants find themselves stretched too thin financially one month, it’s cheaper to charge their rent than let it go late – and it keeps them from falling behind and souring their relationship with their landlord.”
Cons of paying rent with a credit card
While paying with a credit card has its advantages, there are a few drawbacks to consider as well:
In the event you are responsible for the credit card processing fee, you’re looking at an increase in your monthly obligation. If the value of your credit card rewards doesn’t surpass the fees, you will lose – not gain – money.
To know if it makes financial sense, look at your card’s rewards program and compare its earnings rates to the transaction fees you’ll be charged. If the fee is 2.5% of the transaction, and you would earn 1.5% in cash back, you would lose 1% every month. So, for a $1,500 rent payment, you’d be down $15.
“It may not sound like much, but over time, it adds up,” says Ande Frazier, former editor-in-chief of MyWorth, a financial education media company. “And if money is tight, [it will impact] what you should be spending on, [like] something essential.”
Credit card debt
As convenient as it is to rely on a substantial credit line when you need it, it’s also easy to over borrow. Pay attention to elevated interest rates and low payments, for they will put you into a deep hole.
“It’s a vicious cycle,” says Frazier.“ That debt will grow and grow, and the compounding interest will be huge. If you can’t afford your rent, you’re living in the wrong place.”
Credit scores consider the amount of debt you owe and weigh it against the amount you can borrow. If you hit your credit limit and the balance stays anywhere near it, your scores will sink. Skip payment cycles and those scores plummet further.
This puts you in a terrible position if you have to move. Almost all landlords check credit reports to see if you’re a low-risk tenant. So, if they see excessive debt and a pattern of missed payments, they may pass you over for tenancy.
See related: How to rent an apartment with bad credit
In extreme situations, charging your rent and then paying incrementally can keep you in a positive position with your landlord. To avoid credit card debt spiraling out of control, pay as much as you possibly can to the balance each month.
When life returns to normal and you want to continue to charge your rent, make sure you always have the money in your checking account to cover the payment when the bill is due.
Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” Her articles and insights are featured in such publications as The Wall Street Journal, Pregnancy, Babytalk, Redbook, Bank Investment Consultant, Prosper.com, MSN Money and Dow Jones MarketWatch. An active television and radio commentator, Sandberg is the credit and money management expert for San Francisco’s KRON-TV, a frequent guest on Forbes Video Network, Fox Business News, Bloomberg TV and all Bay Area networks. Prior to launching her own reporting and consulting business, she was affiliated with Consumer Credit Counseling Services of San Francisco where she counseled individuals, conducted educational workshops and led the media relations department. Sandberg is a member of the Society of American Business Editors and Writers and on the advisory committee for Project Money.