In short, yes — but usually it is not free. Ensure the convenience is worth the potential cost to your wallet or your credit score. Using a credit card to pay your rent has its merits. For starters, you don’t have to go through the trouble of writing a paper check and waiting for it to be cashed.
Additionally, it gives you flexibility. If one’s rent is due before payday, one can cover the expense with one’s card and pay oneself back when one’s paycheck arrives, all while avoiding an awkward conversation with one’s landlord about late fees.
Even if one’s landlord doesn’t accept credit card payments, you still have options. Some rent payment services will facilitate credit card payments — for a fee. It is convenient, though it may end up costing you more than you would have paid if you had simply opened your chequebook.
Lately, though, you may be able to avoid such processing fees on rent payments, and even earn rewards on those payments, with the right credit card.
How to Pay Rent with Your Credit Card
Several options give tenants the opportunity to make rent payments online. Some need your landlord’s involvement, while others do not.
Plastiq
Plastiq allows one to pay one’s landlord with a credit card, and it doesn’t require one’s landlord to have an account. One pays Plastiq a fee equaling 2.9% of one’s payment every time one uses a credit or debit card.
Payments can be done manually or scheduled automatically. Plastiq then cuts one’s landlord a check or delivers an electronic payment.
PlacePay
PlacePay, previously known as RentShare, requires landlords to accept direct deposit. It charges a fee of 2.99% for every credit card or debit card payment, and a $1.95 flat fee per ACH payment — a payment made directly from the user’s bank account. The platform permits roommates to split the cost of rent and choose their own payment method. You can schedule payments automatically or pay manually through the mobile app for iPhone and Android devices.
“When a landlord reports rent payments to a credit bureau, it is presented as a separate tradeline or account on your credit report, much like an auto loan or a credit card,” John Danaher, president of consumer interactive at TransUnion, said through email. (TransUnion is a NerdWallet business partner.) “Lenders will review that, along with your other payment information, to determine your riskiness as a borrower. They will look favorably on consumers who show they have responsibly managed credit in the past.”
Factors to Consider Before Paying Rent with a Credit Card
Although paying rent with a credit card is comfortable, it may not be the best move for your budget. Consider the following factors first:
Fees
Some rent payment services use the opportunity to earn incentives for paying rent with rewards credit cards, but the cost of the processing fee can eliminate any reward earnings. If you have a rent payment of $1,000 and you are paying a 2.99% processing fee, that’s an additional $29.90 every month.
For most cards, though, credit card reward rates vary, and they usually will not exceed the cost of the fee. Here’s an exception: Your rent payment can help meet the spending requirement for a hefty credit card sign-up bonus.
Some of these services offer ACH payments for free, but of course, you will lose the flexibility of paying with a credit card. In some cases, ordering checks from your bank and paying your rent the old-fashioned way may still make the most sense.
Interest Payments
It can be tempting to put rent on a credit card if you wish to free up that money for something else, or if you can not afford it that month.
But if you do not pay your credit card bill in full every month, the interest payments on your ongoing balance can pile up. Add that on top of the processing fee for the convenience of using a credit card, and your total costs increase.
Effect on Your Credit Score
If you pay your rent with a credit card could affect your credit score by increasing your credit utilisation ratio — the total amount of debt you have compared with the amount of available credit you have. If, for instance, you have a $10,000 credit limit and a $5,000 balance, your credit utilisation would be 50%.
Your credit utilisation ratio is a major factor in your credit score, so typically you should aim to keep it low, generally at no higher than 30%. But putting thousands of dollars in rent on a credit card can temporarily push that ratio higher.
Of course, if you are struggling or experiencing an emergency and have no other immediate option, it may be necessary to make such a transaction. Just remember that as long as you keep up with your bills and can pay them back over time, your credit score will eventually bounce back.
Still, aim to exhaust all other options before going that route.
If you wish to pay rent with a credit card, consider doing it with the credit card that has the lowest interest rate, and try requesting a credit limit increase from your issuer first. And then, of course, pay off the amount in full every month, or contribute as much as possible.
Should You Pay Rent with Your Credit Card?
If you are looking for flexibility and wish to avoid the hassle of writing checks, paying rent with a credit card can be a good option — especially if you pay your credit card bill in full every month and you’re earning rewards that can help defray the cost of convenience fees.
But if you have a low credit limit or your income is unstable, putting your rent on your credit card could be dangerous. It could affect your credit score and your wallet if you fail to pay it off in time. Consider the pros and cons and make the best decision for your situation.
