How to pay rent with a credit card

There are plenty of reasons to consider paying rent with a credit card, and more than one benefit can apply. For example, it buys you some time until the actual payment is due, and you can even carry a balance from one month to the next if you need to. This means that if you’re behind on rent or soon will be, paying with a credit card can help you catch up and keep a roof over your head.

In the meantime, paying rent with a rewards credit card can help you earn cash back or travel points for the money you spend on housing each month. And a few months of rent payments might even be enough to meet the spending threshold for a generous credit card sign-up bonus.

But, how exactly can you pay rent with a credit card? And, is it always possible? Read on to learn how it works, as well as different strategies you can use to make it happen.

How to pay rent with a credit card

You may have to pay extra fees or jump through a few hoops to pay your rent with a credit card.

Here are some of the strategies to consider, as well as some of the extra steps and costs involved.

Ask your landlord if you can pay with plastic

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 percent and 3.49 percent 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 percent of the transaction, the added cost would be $53.82. If the minimum credit card payment is 2 percent of the balance, your payment would be $36. Add the fee to it and all you’d need to pay for the first month is $89.82 — a far cry from the $1,800 due.

If your landlord doesn’t accept rent payments via credit cards through a major software program, they 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 in this case, 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 any fees charged by your credit card, such as cash advance fees, if they apply.
• The payment platform will charge its own fee. For example, PayPal charges a 2.9 percent convenience fee plus 30 cents to send someone money with an attached credit card.

Take out a cash advance on your credit card

Another way to use your credit card to cover your rent involves taking out a cash advance. However, using your credit card for a cash advance comes with some serious consequences, so you should make this method your last choice:

• Fees can be 5 percent of the amount you withdraw.
• Interest rates are often higher on cash advances than they are on purchases.
• Cash advances do not give you an interest-free grace period, so interest begins accruing from day one.

With this in mind, you should only use your credit card for a cash advance if you have no other option. Also make sure you have a plan to pay the balance off quickly after you take out the cash advance. Otherwise, hefty interest charges that begin the day you it take out will make your rent cost a lot more than it normally would.

Pay your rent using a third-party company

There are several third-party services that let you pay rent with a credit card, albeit after paying a fee based on a percentage of the rent amount. One example is Plastiq.com, which lets you pay rent with a credit card with an added charge of 2.85 percent.

Other options include RentTrack.com and PlacePay.com, to name a few. Some third-party companies require your landlord to get on board to accept their payments, yet others (like Plastiq.com) will simply mail them the payment after charging your credit card.

Pick up a rent-specific credit card

You can also pick up a rent-specific credit card such as the Bilt Rewards Mastercard from Wells Fargo. This card was created to help people earn rewards on their rent payments, and it offers bonus rewards in other categories to boot.

Specifically, it lets you earn 1X points on all rent payments up to $50,000 each year, as well as 2X points on travel purchases when booked directly with an airline, hotel, car rental or cruise company, plus 3X points on dining. You can also earn 1 point per dollar spent elsewhere, although cardholders have to make at least five transactions during each statement period to earn these points. This card also comes with no annual fee.

In addition to earning rewards on rent with this card, you can redeem rewards for rent payments, a down payment on a home, transfers to airline and hotel partners, eligible group fitness classes and more.

Pros of paying rent with a credit card

Aside from helping you through an emergency or making it possible to earn rewards on your rent, charging your housing bills could come with 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 more than 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.

Your cash flow freedom could be even greater if you’re able to charge rent on a credit card that offers a 0 percent intro APR, provided the purchase doesn’t show up as a cash advance. By securing 0 percent APR for a limited time, even a year or more, you would free up your cash flow and get the chance to pay down a few months of rent payments as you can afford it.

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 percent 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. If you find you’re stretched too thin financially one month, it’s cheaper to charge your rent than let it go late — and it keeps you from falling behind and souring your relationship with your landlord.

Earn a generous credit card sign-up bonus

In some cases, you may need to spend a lot on your card to earn a generous bonus offer. By charging rent to your credit card, you can meet the minimum spending threshold faster, or even meet a higher spending requirement to earn a bigger bonus altogether.

In either case, it can make sense to pay an added fee to use a credit card to pay rent. As an example, let’s say you’re trying to spend $4,000 within three months of account opening to earn 80,000 bonus points on the Chase Sapphire Preferred Card. If you charged $4,000 in payments toward rent for three months and paid a 3 percent fee to do so, you could effectively be paying $120 to earn a bonus worth $1,000 towards travel.

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:

Fees

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 percent of the transaction and you would earn 1.5 percent in cash back, you would lose 1 percent 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 damage

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.

Bottom line

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, however, you’ll need to pay as much as you possibly can to the balance each month.

When life returns to normal and you want to continue charging your rent, make sure you always have the money in your checking account to cover the payment when the bill is due.