It’s almost the first of the month and you don’t have money for your rent — yet. What can you do? First, don’t panic. Second, review your options. Third, consider using a credit card to pay. The question you need to ask isn’t, “Can you pay rent with a credit card?” but “Should you pay rent using a credit card?”
You definitely can pay your rent with your credit card, but it’s a convenience that could cost you more than you think. Keep reading to find out the pros and cons of paying rent with plastic — to determine if you can afford to pay rent this way.
How to Pay Rent With a Credit Card
The bad news is that most landlords don’t accept credit cards for rent payments. Instead, they typically accept only checks because they have to pay a fee to accept credit card payments. The good news is that you can still pay your rent with a credit card, but you’ll have to use a third-party service and that will cost you. A number of services enable you to pay your rent — or mortgage — via credit or debit card, for a fee.
Companies such as Cozy, RentShare, Plastiq, Avail and Venmo provide this service — to name a few — and they charge anywhere from 2.5 percent to 3 percent per transaction. Some of these services even report your payments to the credit bureaus, so there is an opportunity to build your credit. Typically, all you have to do is create an account, designate to whom you want your payments to go and enter your credit card information.
Pros and Cons of Paying Rent With a Credit Card
Of course, there are pluses and minuses to paying rent with a credit card:
- It might help to use a card payment for your rent to reach a credit card’s spending requirements for a cash reward or bonus points.
- It’s a good way to make ends meet before payday and it beats predatory loans, such as payday loans.
- If payments are reported to credit bureaus, it could help your credit score.
- You’ll pay a fee for the convenience.
- If the fee you pay costs more than the cash-back credit card rewards you can earn, you’ll lose money.
- The charge on your card will increase your credit utilization ratio — how much credit you’re using versus how much you have available. You’ll want to keep your credit utilization ratio as low as possible, aiming for between 10 percent and 30 percent at most, so if paying your rent causes it to soar past 30 percent, you’re better off paying with a check.
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Who Should Pay Rent With a Credit Card
Paying rent with a credit card is not a great idea for most consumers. If, like many people, you don’t pay off your credit card each month, the interest incurred on a rent payment can be significant — and remember, that’s on top of the fee the company charges you for the convenience of paying with credit. Some of these services have lower prices than others and some even enable a landlord to waive the fee. If you can swing that and pay off your credit card when it’s due, then this might be the best route for you.
Click to find out how to use a credit card for a down payment.
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