Can You Pay Rent With a Credit Card?

For those who buy stamps and handwrite rent checks to send by “snail mail” to an out-of-state landlord each month, as I do, the very question of whether you can pay rent by credit card may seem confounding.

But if you’re questioning the possibility, the first step is to confirm that the option to pay rent by credit card is indeed available to you. Many landlords, my own included, don’t or won’t offer the option to pay rent by card; they prefer cash, check, or money order.

If your situation is different from mine – perhaps your “rent check” goes to a large property management company, or your landlord is exploring different payment solutions – then it may indeed be possible to pay rent with your credit card. If your landlord doesn’t accept credit cards, they still might consider allowing you to use a third-party rent payment service.

First, talk to your landlord. If this payment option is available, your landlord will likely give you instructions for how to pay by card, perhaps through a secure online payment portal.

If your landlord doesn’t offer a way to pay by card, there are also third-party rent payment services that work by depositing the payment directly into your landlord’s bank account through a version of direct deposit. Some services might require your landlord to be onboard with the process and open up an account. Other rent payment services need only your permission to deliver your rent as an electronic payment or a paper check, but it’s still a good idea to talk to your landlord about it first.

For the convenience of paying rent by credit card, whether through your landlord’s established payment system or a third-party service, you might have to pay a service or processing fee on top of rent.

While convenient, paying rent with a credit card may not be cost-effective. It’s important to consider factors like fees, potential interest charges, your own personal finance habits, and how this payment method might affect your credit score.

Fees:

Let’s say your rent is $1,000 a month, and the service charges a standard 3% processing fee. As a one-time charge – maybe cash flow is tight this month, or you’re trying to meet the spending threshold for a new card’s welcome bonus – $1,030 may indeed be worth it in the short term, particularly if you pay off your card balance, in full, before interest begins to accrue.

If you pay rent by credit card every month, remember that you’ll have to pay the 3% fee monthly. In keeping with our example above, that means $360 annually in total processing fee expenses.

Interest charges:

For those who pay their credit card statement balance in full by the payment due date, you won’t need to worry about interest charges. But if you’re not sure you’ll be able to make the full payment – or you happen to forget to pay on time – the interest you are charged will be added to the aforementioned standard processing fees.

For each statement balance that is not paid in full, interest will continue to be charged on the remaining balance from one statement period to the next.

Personal finance habits:

If you have the tendency to overspend or struggle to pay off your credit card balances before interest is charged, paying rent by credit card might not be a good idea. Rent tends to be a fairly high monthly expense. If paying becomes a challenge, it might be better to rework your budget or consider looking for a more affordable living arrangement.

Credit score:

Take note that paying rent by credit card can directly affect your credit utilization ratio, which accounts for 30% of your FICO score. Your credit utilization ratio is how much you owe on all of your credit accounts combined vs. how much credit is available for you to spend. Regularly making large charges, like rent payments, can increase your credit utilization ratio, which can lower your credit score – unless you actively work to keep your balance down.

The bottom line? Do the math first. If paying rent with your credit card eats too much of your utilization ratio, if your income is unstable, or if you don’t expect to pay off your rent in full each month, along with the rest of your balance, this option could hurt your credit score and put you further into debt. But if paying rent with a credit card is an available option, is convenient, and could help you earn rewards that’ll outweigh fees – especially if you’ll pay off your balance in full before accruing interest – it may be worth considering.

Say goodbye to the hassle of pen, paper, and postage, and hello to convenience, enhanced cash flow, and rewards.

• Avoid late rent payments: A credit card can be a way to quickly cover mounting expenses when money is tight, so you don’t have to worry about paying rent late. Again, if you don’t pay off your credit card balance in full and on time, you risk being charged interest – which contributes to debt.
• Rewards: Opting to pay for larger expenses like rent by credit card can help you rack up additional points or cash back rewards.
• Convenience: Compared to writing and sending a check by snail mail, credit cards can provide a secure and convenient alternative to paying rent on time.
• No risk of bounced checks: When there are not enough funds in your checking account to cover the payment written against it, the check will bounce, resulting in an overdraft fee to your account and a possible deposit return fee to the check recipient. Credit cards eliminate this risk – as long as the charge won’t take you over your credit limit.

Despite convenience, paying rent by credit card can have a negative impact on your financial health.

• Maxing out your card: If you max out your card, your payment could be declined, and you could be hit with additional fees.
• Fees: Service and processing fees can add up, ultimately making your monthly rent payment more expensive than it would be otherwise.
• Interest: You’ll be charged interest unless you pay the full amount of your statement balance by the due date. Like processing fees, interest effectively makes your monthly rent even more expensive.
• Creeping credit utilization ratio: If your credit utilization ratio increases, your overall credit score might take a hit. A higher credit utilization ratio also means you have less of your available credit limit to spend elsewhere, especially if you have a low overall credit limit.