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The Pros and Cons of Paying Rent With a Credit Card

If you normally use your credit card to earn rewards on the things you buy every day, charging your monthly rent payment can be a quick way to rack up even more points or miles. Paying your rent with a credit card is certainly more convenient than writing out a check each month, but it comes with certain drawbacks. Here are some advantages and disadvantages to keep in mind if you decide to use plastic to cover your housing costs.

Related Article: Are Credit Card Rewards Taxable?

Pro: It Can Help You Build Your Credit

Two of the major credit bureaus (Experian and TransUnion) now include rental payment information on your credit history if your landlord is proactive about reporting it each month. If you’re in your 20’s and just starting out, that can help you build up your score. But faithfully paying your rent on time won’t get you anywhere if your landlord doesn’t report it (you can do it yourself through a third-party site like RentReporters.com or Rental Kharma).

The Pros and Cons of Paying Rent With a Credit Card

When you pay with a credit card, on the other hand, your payment history shows up automatically. Some landlords allow you to make credit card payments directly while others accept payments made through apps like RentShare or RadPad. As long as you’re not late paying the bill each month, it’ll reflect positively on both your credit report and your credit score.

Related Article: How to Really Read Your Credit Report

Con: Your Score Could Go Down If You Carry a Balance

Rent is typically the largest expense most people have, so if you’re charging several hundred (or thousand) dollars each month, your balance is going to balloon quickly if you’re not paying the card in full on the due date. The more of your credit line you’re using, the higher your credit utilization ratio will be. And that can knock points off your credit score. Ideally, it’s wise to aim to use no more than 30% of your available credit at any time.

The other thing to keep in mind if you’re carrying a balance is that you’re going to pay interest on it, making your rent that much more expensive. Unless you’ve got a 0% interest card or you’re absolutely sure you can pay it in full each month, you might be better off sticking to a check or debit card.

Try out the SmartAsset rent vs buy calculator.

Pro: It’s Easier to Split Rent Payments With a Roommate

If you live with someone else, hounding them for their fair share each month is a pain, but it can be less of a hassle if you pay with credit. The RadPad app, for example, allows you to split the rent automatically and only pay your half right through your smartphone or other mobile device. You can link up your account with your roommate’s so you’ll be able to see when their payment posts.

Con: It’s Not Free

The Pros and Cons of Paying Rent With a Credit Card

Just because your landlord is set up to process credit card payments doesn’t mean you won’t pay a fee for that service. This fee can be charged directly by the landlord or property manager or they can be incurred if you use a rent payment app. The amount of the fee is usually calculated as a percentage of your rent and it can vary widely depending on how much you pay each month.

RentShare and RadPad, for instance, charge a fee of 2.9% to process credit card payments. If you’re using a rewards card to pay, the fee can easily negate any points or miles you might be earning. Some payment processors will allow you to get around the fee by using a debit card instead, but then you’re missing out on the rewards. In the end, it’s important to weigh each option and decide which payment method best fits your needs.

Photo credit: ©iStock.com/gpointstudio, ©iStock.com/Squaredpixels, ©iStock.com/Marco_Piunti

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Rebecca Lake Rebecca has been writing about the nuts and bolts of personal finance since 2009. Her work has appeared on a number of popular finance sites, including the Quickbooks/Intuit small business blog and Money Crashers. As a homeschooling mom of two, she's always looking for ways to make the most of every dollar.

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