Can I pay my rent with a credit card?
There may be several reasons you'd like to pay rent with a credit card. Maybe times are tough and you don't have the funds in the bank. Perhaps you're just hoping to score loads of credit card rewards points.
The short answer to the question "can you pay rent with a credit card" is yes, but paying rent with a credit card is not ideal. For that reason, we'll cover some alternatives below.
The process may not be as direct as handing over a credit card. Not all landlords accept credit cards. Even if your landlord is firmly in the "does not accept credit cards" camp, you can use a third-party payment service like Plastiq to pay by card.
Along with dozens of its competitors, Plastiq allows consumers to pay for things by credit card that cannot typically be charged, like rent. Plastiq charges, on average, a 2.9% transaction fee. If your rent payment is $1,000 per month, paying it through Plastiq would cost an additional $29.
What about a cash advance? It's a terrible idea. The average cost to take out a cash advance is 5%. If your monthly rent payment is $1,000, the cash advance fee would be $50. In addition, the average interest rate on a cash advance ranges from 17.99% to 29.99%. To add insult to injury, there is no grace period -- you begin paying interest on that money immediately.
Be cautious when deciding whether or not to pay rent with a credit card. As the interest on your debt compounds, you'll quickly move into dangerous financial territory. That's why credit cards are not necessarily the best way to pay rent.
Note: Like many other companies in the crowded fintech sector, Plastiq has recently hit a bump in the road, laying off 85 employees in February and another 40 in April. On May 24, 2023, Plastiq filed for bankruptcy protection. Since that time, Priority Technology Holdings has purchased the company and continues to conduct day-to-day operations.
Landlords' reluctance to accept credit cards
Americans have been asking for years, "Can you pay rent with a credit card?" And for years, the answer from most landlords has been, "Absolutely not."
In all fairness, landlords who refuse credit card payments have legitimate concerns, including:
- An angry tenant may pay rent, then dispute the transaction. If that tenant manages to convince their credit card company they didn't approve the charge, the transaction can be reversed, and the landlord is left with nothing.
- Credit card payments are not automatically processed. In fact, it can take days for a landlord to receive payment.
- Transaction fees eat into a landlord's budget.
So the idea of paying rent by card limped along without ever gaining real traction. And then the pandemic hit.
As coronavirus made its way across the globe, businesses of all kinds had to adjust. With millions of Americans out of work, some landlords began to see the light. Tenants who couldn't make ends meet looked for alternative ways to cover their rent. And landlords, sweating the thought of months without payments, looked for ways to enable credit card transactions.
What happens if I pay my rent with a credit card?
Paying your rent with a credit card may get you out of a short-term jam, but as we discussed above, it can be costly.
- If you can't pay off the balance every month, you'll start accumulating expensive interest fees. Credit card debt can cost you hundreds in extra fees over the years and take a long time to pay off, especially if you're only paying the minimum.
- Landlords almost always pass credit card transaction fees on to their tenants. Transaction fees range from 1.3% to 3.5%, depending on which card you use. For example, if your rent is $1,000 a month and you are charged a transaction fee of 2.5%, that's an extra $25 per month.
- If you want to use a credit card to pay rent to rack up credit card reward points, the transaction fees will almost always be as much or more than your reward points are worth.
Of course, if you are facing eviction or considering more drastic measures such as a payday loan, paying by credit card might be your best option.
If you absolutely have to pay with a credit card, some of the best credit cards offer a no-interest introductory period (some offer no interest for as long as 18 months, and occasionally even longer). This can save you hundreds in extra interest charges, as long as you're able to pay off the balance before the no-interest period expires.
Better alternatives to paying rent by credit card
Millions of Americans have trouble making rent payments. However, paying by credit card can put you into debt and cost you a pretty penny in interest charges. If you haven't already, consider the following instead:
- Look into rent assistance. If you're currently out of work, dealing with reduced hours, or experiencing lower household income, you may qualify.
- Be honest about your circumstances and ask your landlord if they will accept a partial payment. For many landlords, that's preferable to dealing with an eviction.
- If you find making bi-weekly payments more manageable, ask your landlord to allow you to break your monthly payment in two.
- Call your utility company, cellphone provider, credit card company, and car lender to find out if they offer assistance to people who are struggling financially. Reducing the cost of your other bills may free up enough money to pay rent.
- Get a roommate or rent out a room. If you're planning on renting a room (instead of adding a roommate to your lease), make sure to check local government requirements before you jump in.
- If you have a special skill (like sewing, finishing floors, or tiling backsplashes), find out if your landlord will allow you to make improvements to empty units in return for reduced rent.
- Take on a side hustle from home or sell things you no longer need.
There are many ways to make ends meet that won't plunge you into high-interest debt. Paying rent with your credit card and racking up debt should be a last resort.
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