If you’re trying to earn a sign-on bonus or accrue travel reward points, using your credit card to pay rent might be a good idea. However, before asking your landlord if they accept credit card payments, it’s essential to consider the potential costs, as fees may make this option more expensive.
Paying the rent with a credit card can help you meet the minimum spending requirement to qualify for a sign-on bonus or earn points toward your next vacation. Additionally, if you’re short on cash, using a credit card to pay rent can buy you time until your next payday.
Despite its benefits, paying rent with a credit card has some downsides. It can end up costing you more money in the long run, and if you’re not careful, it can also negatively impact your credit score.
How to Pay Your Rent with a Credit Card
Before paying rent with a credit card, check if your landlord accepts credit card payments. If you live in a managed apartment complex, you might already have access to an online payment system that accepts credit card payments.
Alternatively, you can use an app like Venmo to pay rent with a credit card.
However, some landlords only accept traditional payment methods, such as checks. If that’s the case, there are other options to consider.
Once you’ve determined whether or not you can pay rent with a credit card, you should check the processing fees, which are usually a percentage of your payment.
While processing fees are typically low, they can add up over time. For example, a 1% monthly processing fee on a $1,000 rent payment adds an extra $10. This can significantly increase your annual housing costs.
After you’ve considered the processing fees and determined whether or not you can use a credit card, choose the credit card that makes the most sense for paying your rent.
Bilt Rewards Mastercard
The Bilt Rewards Mastercard is ideal for those who want to pay their rent using a credit card. With no processing fees, this card allows you to earn rewards points on your rent payments. Similar to your bank’s bill pay feature, Bilt Rewards Mastercard sends a check to your landlord, which can be put on your credit card.
You can earn 1x points on rent payments (up to 50,000 points per year), 2x on travel, 3x on dining, and 1x on all other purchases. You also need to make five monthly purchases (rent counts as one) to earn points. If you pay your rent but don’t make any additional purchases, you will only earn 250 points that month.
You can use your reward points to book a vacation or pay next month’s rent. Additionally, Bilt offers a homeownership savings program where you can save and use your points towards a down payment.
Using your Bilt Mastercard reports your credit utilization to the credit bureaus, which can help you build your credit by paying rent. This can be an excellent option if you’re looking for ways to make your credit, but it can be harmful if you miss a payment.
There are two ways to use a Bilt Mastercard without fees. First, you can rent an apartment in a building of the Bilt Rewards Alliance. If you pay by check, Bilt will provide you with a custom checking and routing number through a Bilt Rent Account. When you pay through your account, they will cut a check to your landlord on your behalf.
Second, you can use your Bilt Mastercard through your landlord’s payment processing system or connect your Bilt Mastercard to your Venmo account like any other credit card. However, your landlord and Venmo may charge their fees for processing a credit card, so double-check before you take this route.
While plenty of cards earn rewards, you will still be responsible for the processing fees. Depending on those fees, it can zero out any benefit you might get from earning rewards points. Bilt’s payment system makes it possible to pay rent, earn rewards, and build credit without extra fees.
Payment Platforms: Comparing Plastiq, Venmo, and Cash App
When it comes to paying bills, there are a variety of payment platforms available, but three of the most popular are Plastiq, Venmo, and Cash App. Each forum has its unique features and fees to consider.
Plastiq
Plastiq is a third-party payment platform that allows users to pay invoices with a credit card. It works similarly to using bill pay at your bank. Once you submit your payment to Plastiq, they will cut a check to the vendor on your behalf. The processing fee for paying with a credit card is 2.85%, lower than other rent-based payment processing platforms.
Venmo and Cash App
Venmo and Cash App are two of the most well-known payment apps. Both services allow you to send money to any other user for free using a debit card or bank account. However, if you pay with a credit card, both platforms charge a 3% fee.
Other Payment Apps
There are a variety of other payment apps available as well. Check out our list of 10 person-to-person payment apps to find the right one.
No matter which platform you choose, consider the fees and features before making your decision.
Benefits of Paying Rent with a Credit Card
One advantage of using a credit card to pay rent is the potential to earn rewards or sign-up bonuses. Some credit card companies offer points or cash back when you spend a certain amount within a specific time frame.
If the cost of the transaction fees is lower than the value of the reward, it may be worth paying the rent with a credit card for a few months to reach the minimum spending requirement.
Ways to Build Your Credit Score
A good credit score is essential to take out loans or apply for credit cards. One way to build your credit score is by using a credit card. Five factors affect your credit score, and payment history and credit utilization make up the most significant percentage of these factors.
You can also pay your rent with a credit card to build your credit score. The Bilt Mastercard is designed to report your payment history to credit reporting bureaus, which can help you make your credit score.
However, paying rent with a credit card is one of many ways to build your credit score. Experian Boost™ is a service that allows you to report your rent on your credit report to increase your score. To use it, you must rent from a landlord or property manager that uses a rent payment platform.
Your credit score can impact your ability to take out loans and determine the interest rate you will be charged. Therefore, ensuring your credit score is as high as possible is essential. If you want to boost your score to get better loan terms for a big purchase, such as a mortgage, talk to your landlord and see if they will work with you to get your rent reported to the credit bureaus.
Flexible Payments
When you’re running low on cash, using a credit card might provide a solution until your next payday. There is a short grace period before the payment is due and interest is charged. A credit card might seem attractive if you need a few extra days to replenish your bank account.
However, this comes with a set of risks. If you use a credit card but can’t pay it off, you’ll incur processing fees and interest. This can increase the actual cost of your rent while also putting you in debt.
Disadvantages of Paying Rent with a Credit Card
High Processing Fees
Every time you use your credit card, a processing fee is charged. Unless you use a card that does not charge a fee, such as the Bilt Mastercard, you can expect to pay as much as 3% every time you pay rent. This will add to your overall housing costs.
Many rewards credit cards offer points or cash back. However, if the total compensation you earn is less than the cost of the processing fee, it may not be worth it.
Increased Credit Utilization
Paying rent with a credit card can positively and negatively affect your credit score.
Credit utilization is an essential factor. Up to 30% of your credit score is determined by how much credit you use. Making a large rent payment every month can cause your credit utilization to skyrocket.
This may be a minor concern if you regularly pay off your balances when they are due. However, if you are short on cash and carry a balance each month, the high credit utilization can significantly impact your score.
Risk of Incurring Debt
When you are short on money, paying rent with a credit card is a temporary solution. However, this should be a one-time emergency rather than a recurring habit. You will also need a plan to pay off the card balance immediately.
Currently, credit card interest rates are above 19%. If you cannot pay off your balance on time, you will incur interest and create another bill you will have to pay monthly, making it even harder to pay rent next time.
If you regularly find yourself short on cash, instead of charging your rent to a credit card, it may be time to consider the following:
- Downsizing to a cheaper place
- Getting a roommate or two
- Modifying your budget to accommodate your rent
Rewritten Summary
Paying rent with a credit card can be an attractive option for some people. Credit card enthusiasts can use it as an easy method to earn points and travel rewards. Additionally, a credit card can help you pay rent before your payday arrives if you’re low on cash.
Credit card companies, such as the Bilt Mastercard, have designed specific credit cards for renters. This card waives processing fees and allows you to earn points on rent payments.
However, it would help if you considered the risks before using a credit card to pay your rent. If the rewards do not exceed the processing fees, it may not be worthwhile. Furthermore, if you’re struggling financially, charging your rent may put you in debt and harm your credit score.
Before your next rent payment, weigh the benefits and costs of using a credit card as a payment method.