Paying rent with a credit card can sometimes be a good option. It’s convenient, can earn rewards points, and if you’re temporarily short on funds, can ensure you’re on time with rent. But credit cards carry additional costs and risks, and in most situations, they’re not the best way to pay the rent.
We’ll walk through a few different ways to go about paying rent with a credit card. But first, let’s figure out whether you should.
Most Landlords Do Not Accept Credit Card Payments
Unfortunately, most landlords refuse to accept credit card payments. To do so, they would need to pay the hefty interchange fees posed by credit card companies. Landlords also don’t want to deal with chargebacks and other hassles that come with credit card payments. Because of these extra costs and risks, most landlords simply do not accept credit card payments.
There are still third-party services that can help, even if the landlord doesn’t take credit cards. More on that in a minute.
The Cost: Watch Out for Interchange Fees
With all that said, some landlords will accept credit card payments. But beware: Remember the interchange fee the landlord needs to pay the credit card company? Many landlords will just pass that fee onto you, meaning you are now paying more for rent.
Typical interchange fees are about 2% to 3% of the transaction. So on a $1,500 rent payment, those fees would range from $30-$45 per month. Pretty hefty.
If you still want to pay rent via credit card, ask your landlord or check your lease to see if you can. Whether you choose to pay with a credit card or not, at least you’ll know your options.
The Risk: Steer Clear of Credit Card Debt
If you can pay rent by credit card, you should determine whether that’s the best option for you. Ideally, you would use your credit card as a convenience when paying for things, and then pay off the total balance each month.
The problem with using a credit card for rent, however, is that rent usually takes up a sizable portion of your income. If you use your credit card for daily expenses and for rent, you might not be able to pay off the card’s balance each month, and that can cost you a lot of money, especially if your debt accumulates.
Even a small outstanding balance can add up: the average American pays $1,050 in credit card debt per year. Some people pay less, but others pay even more. You can probably think of much better uses for that money.
When to Pay Rent with a Credit Card
If your landlord allows you to pay rent by credit card, and if you can pay off the balance each month, you might want to pay rent this way. Here are some reasons why people like to use a credit card to pay rent:
1. For convenience
If your landlord is old school and likes to receive the rent payment by check, you might want to start using a credit card. Paying by credit card means you don’t need to write a check, get a stamp, put the payment in the mail, and then hope your landlord receives the check on time. That process can be quite time-consuming.
Even worse, your landlord might come knocking on your door, wanting cash, each month. If that happens, you need to have a wad of cash on hand and be home when it’s convenient for your landlord. That can be another huge waste of time that paying by credit card could solve.
Plus, a credit card allows you to pay rent on time in those instances when you are short on funds.
2. For rewards
If you have a rewards credit card, the more you spend using that credit card, the more bonus points you earn. You can cash in those points for products, cash, travel, or hotel stays. However, interchange fees can easily outweigh these benefits. You’ll need to crunch the numbers to determine whether the rewards benefits outweigh the fees.
3. To get a signup bonus
Many credit cards offer attractive signup bonuses to new customers. A good signup bonus is essentially free money. But to get the bonus, you’ll have to spend a certain amount – sometimes thousands of dollars.
You can reach the signup bonus by buying a bunch of stuff you don’t really need – or you can use the card for expenses you have anyway, such as rent. Of course, each card has its terms and conditions, so you’ll need to determine whether you’ll come out ahead or behind in the end.
More Options to Pay the Rent via Credit Card
If your landlord doesn’t accept credit card payments, you can still pay rent using one, and your landlord doesn’t even need to know. How? By using one of several rent payment services. These carry costs of their own – typically on par with those pesky interchange fees.
Here’s a rundown on some of them to help you compare and make the best decision.
When you sign up with Plastiq, you indicate which credit card you want them to use to pay your rent. You pay Plastiq using your credit card plus a 2.5% (or less) fee per transaction. Then, when your rent is due, Plastiq will pay your landlord either by check or bank transfer. Your landlord does not need to have a Plastiq account; only you do.
Radpad allows you to pay rent by credit or debit card. Just like Plastiq, your landlord does not need an account with Radpad. Radpad charges a 2.99% transaction fee for a credit card and a $4.95 fee per month for a debit card for rent payments under $5,000.
You can pay your rent using your bank account, a credit card, or a debit card using PlacePay. The fee for linking and using your bank account is $1.95 per transaction. The fee for using your credit or debit card is 2.99% of your monthly rent. PlacePay is roommate friendly. It pays the landlord in full, and each roommate signs up and pays PlacePay individually.
Another Alternative: Flex
If you don’t have the cash to pay your rent on the first of the month and don’t want to use a credit card, you can use Flex. Flex is a rent payment service that keeps you from needing to use your credit card to pay rent. How? Flex pays your rent for you, typically on the first of every month. And then you pay Flex back during the month on a schedule you choose. Flex fees start at $14.99 a month, which is significantly less than a rent payment service that charges 3% per month.
What About Paying Rent with a Debit Card?
There is little advantage to paying your rent using a debit card. If you plan on doing that, you might as well write a check to your landlord, as the debit card works the same way paying by cash or check does: you need to have the available funds. And if you use a service to pay by debit card, you will typically be charged the same fee as you would if you were using your credit card. Plus there are no rewards associated with using a debit card. While it’s true that it’s more convenient to use a debit card than writing and mailing a check, it usually is not worth the cost for such a small benefit.
Pros and Cons
If you’re considering paying your rent using a credit card, here are some more considerations for you:
|Convenience. Especially compared to mailing a check or paying in cash, credit cards offer a very convenient way to pay the rent.||Costs. With the fees rent services charge, you’re usually better off paying your rent another way. And that’s without even bringing credit card interest into he equation.|
|Rewards. If you will get rewards or an attractive signup bonus, you might wish to strategically use a credit card to get those rewards if the benefit is greater than the cost.||Credit card debt. If you charge too much on your credit card, you could quickly slide into credit card debt.|
|On-time rent payments. If you’re short on cash, using your credit card lets you pay the rent on time, saving yourself any late charges. Plus this helps keep you on your landlord’s good side.||Lowering your credit score. If you max out your credit card by paying rent and are late making payments on top of that, your credit score will most likely suffer, making it difficult for you to get future credit.|
The Bottom Line
There are both advantages and disadvantages to paying rent using a credit card. The good news is that if you want to pay rent using a credit card, you have the options to do so, even if your landlord doesn’t personally accept credit card payments. If paying your rent by credit card is your goal, you now know a few ways to make that happen.