Can You Pay Rent With a Credit Card — and Should You?
It’s possible to pay rent with a credit card, but whether you should depends on your finances and credit card management.
Contributing Writer at Tally
August 11, 2022
Of the roughly 122.8 million households in the U.S., 36% are rented. If you rent, you are likely familiar with making rent payments to your landlord or property management company every month.
You may have wondered, "Can you pay rent with a credit card?" And, even if you can — should you?
Below, you'll find a definitive guide to paying rent with a credit card, including the pros and cons.
Can you pay rent with a credit card?
Yes, you can pay rent with a credit card, but you should only do so if you must. Some property managers use apps and services like Cozy, a payment service that allows renters to pay monthly rent via:
Direct deposit through a bank account
If your property manager does not accept credit cards, you may seek a third-party service to process the payment, such as Plastiq. Services like Plastiq charge your credit card for your rent amount and issue a paper check or ACH deposit to your landlord or property manager.
Should you pay rent with a credit card?
You should pay rent with a credit card only if you have no other option. Below are some pros and cons associated with paying rent using a credit card.
Pros of paying rent with a credit card include:
Building a good credit score by paying rent with a credit card
You can build a positive credit history if you pay your credit card balance in full and on time every month. If you don't have a mortgage or car payment, putting rent on a card could be a good way to demonstrate your trustworthiness to major credit bureaus — i.e., Experian, Equifax and TransUnion.
A history of timely payments on your credit report, which make up 35% of your FICO credit score, could quickly boost your credit score. If you have a low score, charging your rent could build your score high enough to take out additional funding for a mortgage.
Taking advantage of rewards credit cards and other perks
If you earn cash back or travel reward points on your credit card, it may be worthwhile to charge your rent each month. Charging your rent can also be helpful if you’ve opened a new card and the credit card issuer offers an intro sign-up bonus.
For instance, your new card may have a spending requirement of $5,000 in the first three months to receive a $500 statement credit as a perk. You may not be able to spend $5,000 without charging your rent. But, doing so would give you $500 back, effectively reducing your rent for those three months.
Making all your rent payments on time
Has this ever happened to you? The first of the month creeps up on you, and you forget rent is due, but payday is still a few days away. To avoid missing a rent payment, you charge your credit card automatically each month. You don't need to worry about writing paper checks or transferring money to your property manager.
While there are some benefits to charging your rent payment, there are also downsides. Here are the primary disadvantages of charging your monthly rent:
Paying processing fees
One of the biggest downsides to paying rent with a credit card is the extra fee. Any third-party service that accepts credit card payments for rent will charge you a processing fee, typically between 2% and 3%. Plastiq, for instance, charges a 2.85% fee, and Melio charges a 2.9% fee.
Let's say your rent is $1,701 per month — the national average for a one-bedroom rental — and you use Plastiq to process a credit card payment to your landlord. The 2.85% credit card transaction fee equals $48.48. This means your monthly rent payment is $1,749.48. Spread this over the year, and you're paying about $581.76 extra in credit card fees.
You can use a rewards card to pay rent, but you’ll want to calculate whether the rewards outweigh the processing fees. For instance, if a credit card offers 2% cash back but the processing fee is 2.5%, you’ll lose money in the transaction.
Impacting your available credit
Your credit utilization ratio plays a significant role in the “amounts” owed FICO Score variable, which is 30% of your FICO credit score. Your credit utilization ratio reflects the total amount of credit you’ve used versus your total available credit. While there is some debate on what is a good credit utilization ratio, financial experts agree keeping it as low as possible can help prevent a lower credit score.
Charging your monthly rent may negatively impact your credit score depending on your credit limit.
Risking your credit card balance
Credit cards generally aren’t flexible with their due dates. When your credit card bill arrives, you must make the minimum balance payment to avoid late fees and interest-rate increases.
Since rent tends to be a large payment, charging it to a credit card may make your balance too high to pay in full, and this could lead to interest charges and credit card debt.
Paying rent with a credit card — is it for you?
With so many renters in America, at some point, each of them has wondered, "Can you pay rent with a credit card?"
The short answer is yes. Some property managers make it easier than others, but paying using a card is possible. However, that doesn't necessarily mean you should. Paying rent on a credit card is only beneficial if you can pay your balance monthly to avoid debt. Then, you can take advantage of credit card rewards while building your credit by paying in full.
There are disadvantages to be aware of as well. You may have to pay processing fees, or a high credit utilization ratio could harm your credit score. Also, you may incur interest charges or late fees if you can’t pay your credit card balance in full or on time.
If you’ve accumulated credit card debt from rent payments or spending, check out Tally†. Tally can help manage your debt and pay it down quickly, freeing up cash for future opportunities and helping you manage your personal finances.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 to $300.