If you’re looking to earn a sign-on bonus or score some travel reward points, using a credit card to pay your rent might be appealing. But before you ask your landlord if they’ll take plastic, you’ll want to consider the costs – there are fees that might make it a more expensive option.
Paying your rent with a credit card can help you meet the minimum spending requirement to get a sign-on bonus or earn points for your next vacation. Not to mention if you’re short on cash, paying rent with a credit card is a way to buy yourself time until payday.
Despite the appeal, paying with a credit card has some drawbacks. It can cost you more in the long run. And if you’re not careful, it can impact your credit score too.
How Can You Pay Rent with a Credit Card?
The first thing you’ll want to do is check with your landlord to see if they’ll even take plastic. If you rent from a managed apartment complex you might already have access to an online payment system where paying with a credit card is an option.
If you use an app, like Venmo, you can opt to pay with a credit card instead.
Some landlords prefer getting paid the old-fashioned way. They expect you’ll hand them a check on the first of the month. If that’s the case, there are a few options below that you can consider.
Once you determine whether or not you can pay with a credit card you’ll want to take a look at the processing fees. This is typically a percentage of your payment.
Processing fees are low but can add up. A 1% processing fee might not seem like a lot but on a $1,000 rent payment that is an extra $10 a month. Over time that can really add to your annual housing costs.
After you’ve figured out whether or not you can use a credit card and what the processing fees look like, determine which credit card makes the most sense for paying your rent.
Bilt Rewards Mastercard
The Bilt Rewards Mastercard is designed for individuals who want to pay rent with a credit card. It allows you to earn rewards points on your rent and there are no fees, including processing fees. They will actually send a check to your landlord, much like bill pay through your bank, except this goes on your credit card.
Users earn 1x points on rent payments (up to 50,000 points per year), 2x points on travel, 3x points on dining, and 1x points on all other purchases. You also need to make at least five purchases (rent counts as one) per month to earn points. If you pay your rent but don’t make an additional four purchases then you will only earn 250 points that month.
You can use your reward points to book a vacation or pay next month’s rent. Bilt also offers a homeownership savings program where you can save your points and use them towards a down payment.
Your use of the card is also reported to the credit bureaus. This means you can build credit just by paying rent. This can be a good thing if you’re looking for ways to build your credit (but bad if you miss a payment).
There are two ways to use a Bilt Mastercard without fees. One way is to rent in an apartment building that is part of the Bilt Rewards Alliance. If you pay by check, Bilt will set you up with a Bilt Rent Account that has a custom checking and routing number. They will cut a check to your landlord on your behalf when you pay through your account.
You can also 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 own fees for processing a credit card, so double check before you take this route.
While there are a ton of different cards that earn rewards, you’ll still be on the hook for the processing fees. Depending on those fees, it can zero out any benefit you might get from earning points. Bilt’s payment system makes it possible to pay rent, earn rewards, and build your credit without extra fees.
Check out our full review of Bilt Rewards Mastercard here.
Plastiq is a third-party payment platform that allows users to pay invoices with a credit card. You can use this service to pay any bill you normally pay with a check – including your landlord. It works similar to using bill pay at your bank.
Once you’ve submitted your payment to Plastiq, they will cut the vendor – in this case your landlord – a check on your behalf.
A Starter account is free to open and comes with the ability to pay with a credit card. There is a credit card processing fee of 2.85%. This is lower than Venmo and similar rent-based payment processing platforms.
Venmo and Cash App
You are likely familiar with services like Venmo and Cash App. These services allow you to send money to any other user for free. Well, free if you use a debit card or your bank account. Both services charge a 3% fee for paying someone with a credit card.
There are also a lot of other payment apps. Here’s our list of the top 10 person to person payment apps.
Reasons to Pay Rent with a Credit Card
Earn a Sign-On Bonus or Rewards
One reason you might consider paying rent with a credit card is to qualify for a credit card sign-on bonus. Many credit cards award points after you hit a spending target in a period of time.
If the transaction fees are less than the value of the reward, it could make sense to pay your rent with a credit card. At least for a couple of months until you hit the minimum spending amount.
Related: Best credit card sign up bonus offers
Build Your Credit Score
Using a credit card is one way you can build your credit score. There are five factors that affect it:
- Payment history: 35%
- Credit utilization: 30%
- Length of credit history: 10%
- Credit diversification: 10%
- New credit: 10%
Paying your rent with a credit card is one way to do that. The Bilt Mastercard is even designed to report your payment history to credit reporting bureaus to help you build your score.
That said, paying rent with a credit card isn’t the only way to build your credit. Experian Boost™ allows you to report your rent on your credit report to increase your score. To use it, you’ll need to rent from a landlord or property manager that uses a rent payment platform.
Keep in mind your credit score impacts your ability to take out loans and it can determine the interest rate you’ll be charged. If you’re looking to boost your score so you can get better loan terms for a big purchase – like a mortgage – talk to your landlord and see if they will work with you to get your rent reported to the credit bureaus.
Related: How to improve your credit score
When you’re short on cash a credit card might be an option to get you through to your next payday. There is a short grace period before the payment is due and interest is charged. If you need a couple of days to replenish your bank account, a credit card might be an appealing option.
This does come with risks, however. If you do use a credit card and can’t pay it off you’ll not only incur processing fees but interest as well. This can increase the actual cost of your rent while putting you in debt.
Drawbacks of Paying Rent with a Credit Card
High Processing Fees
Whenever you use a credit card there is a processing fee. Unless you use a card – like the Bilt Mastercard – that doesn’t charge a fee, expect to pay upwards of 3% every time you pay rent. This will add to your overall housing costs.
Many rewards credit cards offer points or cash back. If the total reward you earn is less than the cost of the processing fee, it might not be worth it.
Increased Credit Utilization
Paying rent with a credit card is a double-edged sword when it comes to your credit score.
Credit utilization is a core factor. Up to 30% of it is determined by how much credit you use. Making a large rent payment each month can cause your credit utilization to climb precipitously.
This might not be a big deal if you regularly pay off your balances when they are due. But if you find yourself short on cash and carry a balance every month, the high credit utilization can be a significant ding to your score.
Risk of Taking on Debt
When you’re short on dough, paying rent with a credit card might seem like the perfect temporary solution. But this should be a one-off last resort, not a repeat offense. And you’ll need a plan to pay the card balance off as quickly as possible.
Interest rates on credit cards are now north of 19%. If you’re unable to pay off your balance when it’s due, you’ll incur interest and create another bill you’ll have o pay every month, which will only make your rent harder to pay next time.
If you find that you’re routinely short on cash, rather than charging your rent to a credit card it might instead be time to either:
- Consider downsizing to a cheaper place
- Take on a roommate or two
- Modify your budget to accommodate your rent
Paying rent with a credit card is an option that has some appeal. For card hackers, it can be an easy way to score points and travel rewards. And if you’re short on cash, a credit card can help you make rent before payday.
There are some credit cards designed specifically for renters. The Bilt Mastercard is one example. It waives the usual processing fees and allows you to earn points on your rent payments.
That being said, there are some risks to weigh when considering using a credit card to pay rent. If the rewards aren’t higher than the processing fees, it won’t be worth it. Likewise, if you are short on cash, charging your rent can put you in debt and hurt your credit score.
Before next month’s rent is due, weigh the costs and the benefits of whether it makes sense for you to use a credit card to pay your rent.