Many renters want an answer to the question, “Can you pay rent with a credit card?” The short answer is yes. Using a credit card to pay your bills seems like a perfect approach. You pay for many of your purchases with a credit card and that keeps a running record of how much you're spending. You know that it is a secure way to make and track your payments.

You may not be sure how paying with a credit card would work, or whether there are pros and cons you need to consider. In fact, there are many things you'll need to consider that will help you to make the best decision. Let's review the different ways you could use your credit card to pay your rent, and the things you should think about before making that decision.

TL;DR

Paying rent with a credit card is becoming more popular as technology is put into place to handle credit card payments. You may be able to pay rent with a credit card, depending on your landlord's preference. Many landlords now offer a payment portal to make it easy. There are also third-party services that will let you pay your rent online. While there are advantages to using a credit card, you'll need to consider the disadvantages, including transaction and processing fees, to determine if it makes sense for you.

Why You Might Want to Use a Credit Card to Pay Your Rent

There are a number of advantages to using a credit card to pay rent. Those include:

  • Flexibility: If your rent is due on the 1st of every month, you can use a credit card to pay your rent, but you won’t need to use your cash until your credit card payment is due.
  • Financial Cushion: You can pay your rent before you receive funds from your paychecks.
  • Help to Build Your Credit History: If you pay your credit card in full at the due date, it will help improve your credit history.
  • Improve Credit Scores: If you report your on-time payments to your credit bureaus, it can improve your credit score.

How to Use a Credit Card to Pay Your Rent

You can pay your rent using a credit card in two ways. Sometimes landlords will provide a way for you to pay your rent online. If your landlord doesn’t provide that service, there are third-party companies that specialize in paying rent online.

Your Landlord’s Online Payment Process

Some landlords allow tenants to pay their rent with a credit card, but some landlords don’t accept credit card payments. Some landlords are finding ways to use technology to streamline the relationship with their tenants.

Online rent collection is gaining popularity. Many landlords are now automating rent collection by offering rent collection apps that allow you to pay your rent using different payment methods. This approach is becoming increasingly popular because it helps landlords use automation to increase efficiency, and it gives tenants a more convenient way to pay their rent.

Depending on the app used, you can use credit cards, debit cards, bank transfers and other payment options. The app will also send reminders when payments are due. However, this convenience often comes with processing fees from the landlord and/or your bank or credit card company. Make sure to identify the fees for this online convenience before starting to use this payment approach.

Third-Party Services

You may be familiar with some third-party payment services. For example, you might think about paying rent with Venmo. However, Venmo isn’t intended for a commercial process like paying rent.

There are other third-party services that are intended to be used for paying rent. Services like RentPayment and PlacePlay need your landlord’s agreement to accept direct deposits. Others like Rent Track don’t involve the landlord because the service mails a paper check. These services typically charge a transaction or subscription fee.

Disadvantages of Using a Credit Card to Pay Your Rent

Using a credit card to pay your rent has some advantages. However, there are things that could work against you. For example, your landlord may not accept credit cards, and you need to factor in the fees that come with credit card payments. You'd also need to check whether your credit card company considers paying your rent with a credit card to be a cash advance.

  • Your Landlord’s Preference: Some landlords don’t want tenants to pay rent using a credit card.
  • Processing Fees: Some landlords will add a processing fee to your credit card payment. In addition, your credit card company will usually add a transaction fee that will typically be around 2.5% to 3% or more, which increases your rent payment. For example, if your rent is $1,500, a 3% processing fee would add $45 each month to your rent payment.
  • Interest Fees: If you don’t pay your credit card balance in full each month, you will start to see interest charges from your credit card company. That will add a large amount to the credit card debt you owe.
  • Another Bill to Pay: Your credit card company will add high interest rates if you don’t pay your balance in full by the due date.
  • Your Payment Could Be Considered a Cash Advance: The interest on cash advances is typically much higher than the interest on unpaid balances.
  • Higher Interest Rates: Credit card interest is often higher than rates for other types of loans, which means that carrying a balance becomes expensive over time.

Will Using a Card to Pay Rent Affect Your Credit Score?

Your credit score is something you may want to protect. Credit scores are typically calculated based on a number of factors, including:

  • Credit Utilization: Credit Utilization plays a major role in determining your credit score. For example, if you have credit cards with a total of $10,000 in available credit, your credit score will be affected by how much of the $10,000 you’re using. Putting your rent payment on your credit card will increase your credit utilization and may temporarily change or lower your credit score.
  • Missed or Late Credit Card Payments: If you pay your credit card fees after their due date, having late payments may cause your credit score to go down. This could also lead to late fees and higher interest rates.

Tip: The Consumer Financial Protection Bureau recommends making payments on time, paying your balance in full, and keeping your credit utilization ratio under 30%. You may need to open a new credit card to use for your rent payments. If you can pay that bill in full by the due date, you may be able to avoid lowering your credit score and may even raise it due to on time payments.

Should You Use a Credit Card to Pay Your Rent?

In most cases, it may sense to use a credit card to pay your rent if you pay off the credit card balance in full each month. But, you’ll still need to identify the processing and transaction fees that you would need to pay in addition to your rent amount. The fees may outweigh the advantages you’ll see.

FAQs

Would a Debit Card Act Like a Credit Card for Rent Payments?

It depends on the approach you choose for using a credit card, but often a debit card can act like a credit card for rent payments.

Could You Incur Interest Charges If You Pay Rent with a Credit Card?

Yes, you could. You could incur interest charges if you don’t pay your credit card in full each month.

Could Credit Card Companies Consider Rent Payment a Cash Advance?

Yes, some credit card companies will consider your rent payment a cash advance and apply higher cash advance interest rates to your credit card bill.