In an economic emergency, covering even basic yet important expenses can be tough. For example, in 2020, the coronavirus pandemic rocked the foundations of millions of Americans. The National Multifamily Housing Council found that by Jan. 20, 11.4% of tenants had not sent money for their rent.
The last thing you want is to be evicted from your home because of nonpayment of rent. When used correctly, a credit card can help you through hard situations. Since the card issuer only requires a small minimum payment, it can buy you time before getting back on your feet.
Here’s how to charge rent, not just during a financial crisis but under normal conditions as well, advantageously.
See related: How to earn rewards when paying monthly bills
How to pay rent with a credit card
- How to pay through your landlord
- How to pay through third-party services
- Best credit cards to pay rent
- Pros of paying rent with a credit card
- Cons of paying rent with a credit card
How to pay through your landlord
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% and 2.99% 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% of the transaction, the added cost would be $53.82. If the minimum credit card payment is 2% of the balance, your payment would be $36. Add the fee to it and all you’d need to pay is $89.82 – a far cry from the $1,800 due.
If your landlord doesn’t offer this option, consider explaining your reason for wanting to charge the amount. If it’s not a permanent change to the rental agreement (which spells out the method and timing of your payments), your landlord 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, 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 the fee from your credit card company.
Yet another way to use your credit card to cover your rent is to take out a cash advance. It comes with some serious consequences that make this method your last choice, though:
- Fees can be 5% of the amount you withdraw.
- Interest rates are often higher on cash advances than they are on purchases.
- There is no interest-free grace period, as there is for purchases.
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How to pay through third-party services
An alternative to paying your landlord directly is to use a company that acts as an intermediary. The general process is simple:
- Sign up with the company.
- Identify your landlord.
- Enter your rent amount and due date.
- The company charges your card and sends your landlord the money in the form of a paper check or electronic transfer.
- You receive a bill from your credit card company and send any amount that is at least the minimum payment.
You should have no trouble paying any landlord this way if the third party sends your rent with a paper check. It’s the same as if it were coming straight from your own checkbook.
However, if the company sends payments electronically, your landlord would need to register for an account so the money can be deposited.
But charging rent with a third-party company is becoming popular.
“We’ve seen a 50% increase in the number of Plastiq customers that are paying for rent with their credit card [in 2019] compared to 2018,” says Eliot Buchanan, co-founder and CEO of the consumer-to-business bill-paying company.
“However, there are card processing fees involved, so rent payers should compare the costs and benefits of paying rent on a credit card to determine whether it makes sense to do in their particular situation.”
Accepting credit cards for rent payments is a win-win, says Brian Davis, director of education for SparkRental.
“Landlords and property managers who accept rent by credit card offer more flexibility for their renters, with an option to stay current on their rent even if their bank account is short on the first of the month,” says Davis.
Review a variety of third-party companies before deciding on one, paying close attention to the fee structure and whatever unique benefits they may have.
|Third-party service||Transaction fee||Benefits/Perks|
|Plastiq||2.85%||Up to 2% cash back on transactions, depending on your card.|
|RentMoola||2.99% – 3.99%||Earn “MoolaPerks” for deals on travel, shopping, home service providers, etc.|
|SparkRental||2.99% – 3.99%||Designed for landlords with a more challenging tenant base.|
|RentPayment||2.95%||Can pay via app, by replying to a text or by phone.|
|Cozy||2.75%||Can add low-cost renter’s insurance to the payment.|
Best credit cards to pay rent
Some rewards cards offer generous introductory bonuses. You can open an account for the specific purpose of using that bonus to offset the fees involved in charging your rent.
To get the bonus, you have to meet the card’s required minimum spend within the first three months of opening the card. When you do, the reward is yours.
If you get cash back, you can use the money as a statement credit. For cards that give points or miles, you can trade them in for cash too, but you won’t get as much for them as you would for things like travel.
Whatever the case, the introductory bonus will nullify the amount you’re charged in fees when using your card for rent. After that, you’ll be earning rewards on purchases, which will also offset the fees, should you continue to charge your rent.
Just a few examples include:
|Rewards credit card||Minimum spend||Introductory bonus|
|Wells Fargo Propel American Express® card*||$1,000 in first 3 months||20,000 points ($200 cash value)|
|Blue Cash Preferred® Card from American Express||$3,000 in first 6 months||$150 statement credit and 20% back on Amazon.com purchases on the card within the first 6 months, up to $200 back.|
|Citi Rewards+® Card||$1,000 in first 3 months||15,000 ThankYou points (redeemable for $150 in gift cards at ThankYou.com)|
|Chase Sapphire Preferred Card*||$4,000 in first 3 months||100,000 points (redeemable for $1,000 toward travel when you go through Chase Ultimate Rewards)|
See related: Best rewards credit cards
Another option is to open a credit card with 0% APR for an extended period of time.
You won’t be charged interest on the debt you carry over until the rate rises to the regular rate. Therefore, if you charge your rent and can only afford to pay the minimum, the debt won’t escalate with financing fees.
A few good examples include:
|0% APR credit card||Intro APR purchase period|
|Citi® Diamond Preferred® Card||18 months (14.74%-24.74% variable thereafter)|
|Discover it® Cash Back||14 months (11.99%-22.99% variable thereafter)|
See related: Best 0% APR credit cards
Pros of paying rent with a credit card
Aside from helping you through an emergency, charging rent has 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 over 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.
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