If you are wondering whether you can pay your rent using a credit card, the answer is yes. Even if the landlord does not accept payment via credit cards, there are third-party service providers that can facilitate this, with or without the landlord’s involvement.
Is it worth paying by credit card?
It depends on your goal. If you are dreaming of earning cash back or free miles from your credit card source, you might be disappointed. Typically, the fees will outweigh the rewards you will earn, unless you obtain a new credit card that offers a substantial sign-up bonus.
How to pay rent using a credit card
If you decide to pay your rent by credit card, first check with the landlord to see if they accept credit cards. Some property management companies accept online payments, including payment via credit and debit cards.
Be prepared to pay a transaction fee unless you choose to pay via an electronic check or ACH transfer that links directly to your bank account. While you may be lucky enough to find a landlord who processes credit cards for free, most charge fees to cover their own costs. Processing credit cards costs them much more than accepting cash, ACH transfers, or checks, and fees of 3% or 3.5% are not uncommon.
When are credit card rewards more worthwhile?
Many third-party service providers promote the ability for users to earn credit card rewards when charging rent to the card. However, this type of marketing can be misleading. If you do the math, you are likely to find that the fees completely negate the rewards.
The most a credit card can reward you is 2% cash back (or its equivalent in points or miles), while the fees are likely at least 2.5%. So, for example, if you charged $1,600 as rent to your card, you are likely to earn a maximum of $32 in cash back, but you will have to pay at least $40, depending on the fees.
There may be some instances when the rewards outweigh the fees. This is often the case when you obtain a new credit card and need to spend enough to earn a large sign-up bonus. Paying rent is a good way to meet the requirement without overspending on things you don’t need.
For example, suppose you opened a card and need to spend $4,000 in the first three months to get a $750 bonus. If you charge your rent of $1,600 in each of those three months, you’ll meet the requirement and might pay around $120 to $144 in fees. That still nets you over $600 in gains. (Of course, if you can charge enough on your card without paying rent, you’ll save yourself $120 to $144.)
Or perhaps you are trying to quickly accumulate airline miles to help pay for an upcoming trip or earn elite status with an airline. In this case, the benefits you gain from travel may be worth more than the fees incurred.
Paying for convenience or buying time
If you are just looking for a more convenient way to pay your rent, it is better to avoid credit cards and pay directly from your bank account (via ACH transfer or electronic check), as this option is usually free.
In some specific cases, using a debit card may also be free, or at least less costly. The setup procedures with the landlord or third-party service provider are similar to credit card processes, and then payment is quick and easy.
If
Your main goal was to borrow some time to catch up on late bills; consider obtaining a credit card that offers a promotional 0% interest rate for a limited period. You won’t avoid the transaction fees, but at least you won’t incur financing charges either. Just make sure to pay your rent payments in full before the ongoing annual percentage rate takes effect. You don’t want to pay 15% or 20% interest on your rent, of all things.
Comparing Options
When comparing third-party payment companies and peer-to-peer payment services, don’t just look at the fees they charge. You should also consider how quickly the money reaches the landlord and whether they offer a guarantee against payment delays. You may regret using a third-party if it takes too long to send the rent check and the landlord charges you a late fee because of it.
With a peer-to-peer application, you should know quickly that your money has been received. But with a third-party service provider, you might have to wait a week or more to get confirmation that your payment was successful. (Some offer real-time instant notifications with updates on the status of your payment.)
Here are five options for charging your rent if the landlord doesn’t accept direct card payments:
| Company | Credit Card Fees | Debit Card Fees | After charging your card… | Processing Time |
|---|---|---|---|---|
| Plastiq | 2.5% | 1% | A check or ACH transfer or wire transfer will be sent. The check typically arrives within eight business days. Local wire transfers and ACH transfers are done the same day or the next day. | |
| Caretaker (formerly known as Flip) | 2.99% | 2.99% | A check will be sent to the landlord. The check usually arrives within eight to ten days. | |
| RadPad | 2.99% | $4.95 if under $5000; $9.95 if over $5000 | A check will be sent to the landlord. The check could take up to four business days to arrive. | |
| PayPal | 2.9% | 2.9% | Your payment will be directed to the landlord’s account. (The landlord must have a PayPal account.) | Instant |
| Venmo | 3% | Free | Your payment will be directed to the landlord’s account. (The landlord must have a Venmo account.) | Usually instant |
Source: https://www.thebalancemoney.com/charging-rent-to-credit-card-4780219
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