Should i pay my rent with a credit card

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• Paying rent with a credit card is possible, but it comes with several pros and cons.
• Any method used to pay rent with a credit card will cost you additional money in the form of interest or fees, which are only worth it if you get better rewards.
• If you're having trouble with rent, you can try working with your landlord on a payment plan.

Each month, your rent takes a big bite out of your bank account. Putting that money on your credit card might be useful for delaying the actual payment or for racking up rewards, But you need to be mindful of the potential downsides. Here's what you need to know.

Can you pay rent with a credit card?

The short answer is yes, you can pay rent with a credit card. But it will largely depend on your landlord and what forms of payments they accept. So you'll need to call your landlord to see if that's an option — or you can visit their online portal to see your options there. Either way, you'll also want to make sure that it's clear what kinds of fees you might be facing if you take this option, which will be covered later.

How do you pay rent with a credit card?

If you rent from a property management company, you'll most likely have access to a web portal that will accept digital payments, including credit cards. These payments happen through the Automated Clearing House (ACH). 

Some landlords might restrict which credit cards they accept or might only accept, but "by and large, most of them are all accepted if credit card payments are accepted," says Lily Liu, the founder and chief executive officer of Piñata, a tech startup that reports rent payments to the three major credit bureaus. 

On the other hand, if you're renting from a smaller landlord like a mom-and-pop landlord or an individual owner, it's highly unlikely that you'll have access to this payment infrastructure. Instead, you'll need to go through third-party platforms that serve as an intermediary, accepting your credit card transaction and depositing it directly into your landlord's bank account or sending them a check.

Note: Most of these platforms require your landlord's approval before you can enroll through a third-party site that will process your payments for you. 

Regardless of how you pay rent with a credit card, you'll end up paying an additional processing fee to do so. Most processing fees hover just under 3% of your monthly rent. Applied to $1,322, the average monthly rent for an apartment in the US as of February 2022, you'll be paying an additional $39.66 each month.

If neither of these options work for you, you can also indirectly pay rent by taking out a cash advance on your credit card. You're essentially borrowing cash from your credit card, which you can use to pay your rent. This can be useful if your payday is after your rent due date or in other scenarios where you don't have cash on hand when your rent is due. 

This is really only pragmatic if you know for certain you'll be able to settle the cash advance in a short period of time since the APR on cash advances can get as high as 25% with no grace period. Without a grace period, you start accruing interest immediately after you take out the advance.

Pros and cons of paying rent with a credit card

Having the ability to pay your rent with a credit card is one question. Whether you should is another question — the answer to which depends on your reasoning for paying rent with a credit card. 

If you're trying to pay rent with a credit card to gain rewards on your card, you need to consider the additional costs and determine if they outweigh the potential benefits. This could mean having a credit card with a cash back bonus with a higher percentage than your processing fee. You also need to consider any interest that accrues on your credit card, though that shouldn't be an issue if you pay your debt off within the grace period.

Note: Any additional interest you accrue off your rent should be thought of as additional rent you pay as a result of using a credit card.

"Use the card when you know you're going to have the funds at the end of the month to pay the card off," Liu says. "Otherwise, what you've just done is use a credit card on a major life expense that you can't pay off right, and now it's sitting on your card. You're building interest on a very high transaction on that card." 

Pros

Cons

You can pay your rent at any time immediately. 

Using a credit card to pay rent usually comes with additional processing fees.

You can rack up points, cash back, or other rewards on your credit card, assuming those benefits outweigh the fees.

Paying rent with a credit card can result in a high credit utilization ratio, which can damage your credit score. 

Third-party companies usually come with payment guarantees, which means you're not responsible for late fees.

Your rent could accumulate interest if you don't settle your balance quickly enough.

Third-party apps usually need landlord approval.

Other options for paying rent

If you've determined that the pros of paying rent with a credit card outweigh the cons, there are other alternatives, though they come with their own caveats. 

Take out a personal loan: Personal loans are likely not the best option for paying rent, but it is a possible choice. These might be handy if you find yourself without income temporarily, like if you're switching jobs. However, consider that the debt from these loans will also come with interest and your credit score will take a hit from the hard inquiry triggered by your loan application. 

Borrow money from family or friends: If you need rent money immediately, instead of going through a financial institution, it might be best to go to those closest to you. Hopefully, your friends and family won't charge you interest or a processing fee. 

When you're borrowing money from a bank or another financial institution, you're borrowing against your credit. When you borrow money from a loved one, you're borrowing against your relationship with them. You should ensure that you'll be able to pay it off. 

Talk to your landlord: If you're having trouble paying your rent, it's best to be upfront with your landlord about your situation. "We always recommend building a relationship with who you're renting from," Liu says. You can figure out a payment plan in the case of an emergency situation where you're temporarily not able to pay rent. If the issue is timing, your landlord might be flexible about the date you pay your rent. 

"As long as you can create some clarity and alignment with who you're renting from, you can actually build a plan … Maybe there's a small fee associated with it, but at least it gives you the ability to have that extra time," Liu says. "At the end of the day, there's a person on the other side of that transaction."