Why I pay my rent with a credit card

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For many people, the monthly rent payment is their biggest expense. Indeed, according to recent data from the Pew Research Center and US Census Bureau46% of US renters spend at least 30% of their income on rent and 23% of renters spend at least 50% of their income on paying rent.

That’s a lot of money, which means you might be wondering if it’s possible to pay your rent with a credit card.

Whether you’re hoping to earn credit card rewards on your rent payment or looking for credit as a way to temporarily cover a payment you can’t make with cash, there are several reasons to consider paying rent with credit. . There’s also at least one good reason to keep paying your rent the old-fashioned way.

What are the advantages and disadvantages of putting your rent on credit? We spoke to two people who pay their rent with a credit card. Here’s what you need to know.

Paying rent with credit can help you earn rewards

“I like to pay my rent by credit card,” says Matthew Meier, founder of the Las Vegas travel agency MaxTower. “Paying rent with credit helps me meet the minimum spend required to earn sign-up bonuses.”

Credit card sign-up bonuses are some of the most valuable rewards you can earn – and since the best sign-up bonuses can be worth up to $750 or even $1,000, it’s a smart move to make whatever it takes to make sure you clear the minimum spend requirement. Paying your rent on credit is one way to get the job done.

Once you’ve earned your sign-up bonus, you may want to go back to paying your rent by check or direct debit, especially if the fees associated with paying your rent by credit outweigh the cash back, the points or miles you could earn. However, some people decide that paying rent on credit is a good way to maximize their credit card rewards.

“Our apartment charges a 2.5% surcharge for using a credit card, but most of our cards earn 2% cash back or points,” Meier says. “That, added to the huge bonuses we get, makes it very lucrative to pay our rent with a credit card.”

How to minimize fees when paying rent with a credit card

Why do landlords charge extra to pay with credit? In some cases, your landlords are required to pay credit card processing fees in exchange for accepting rent payments on credit – and in many cases, they pass these fees on to you directly.

That’s why it’s important to do the math before putting your rent on credit, especially because rent payments rarely qualify for credit card bonus category rewards. Instead, you’ll generally earn the lowest reward rate on your rent payments. This means you could pay up to 3% in fees to earn 1% cash back, which is a net loss.

One way to minimize fees is to take advantage of your credit card’s payment features. “I have the American Express Blue Cash Preferred® credit card and I pay my rent monthly using the card’s Send & Split feature,” says Alex Wardpublic relations expert and entrepreneur.

American Express Send & Split is an easy way to split payments with other Venmo and PayPal users. Send & Split also lets you send money via Venmo or PayPal without paying standard Venmo or PayPal credit card fees.

“I pay my landlord through Venmo,” Ward told us. If your landlord also accepts Venmo, Amex’s Send & Split could be a great way to pay rent with a credit card.

How to avoid debt when paying rent with a credit card

If you pay your rent with a credit card, make sure you have a plan for paying your credit card bill, or your monthly rent payment could turn into credit card debt.

Ward also uses Amex’s Pay It feature, Plan It®, which lets you pay for large purchases like rent payments with a fixed monthly fee instead of compound interest charges. “Sometimes I use Plan It to spread the rent payment over several months,” he explains.

Ward can take advantage of his credit card’s payment features to pay his rent before it turns into long-term debt. If you’re able to do the same, it might be a good reason to pay your rent on credit, especially if you’re using an introductory 0% APR card to carry over a temporary balance without accumulating interest charges.

No matter how you pay your credit card bill, be aware that maintaining a rotating credit card balance over time could trap you in a cycle of credit card debt. So have a plan in mind before putting large payments, including rent payments, on your credit card.

Your monthly rent payment could increase your credit score

Whether you decide to put your rent payment on credit or pay rent by check, there are ways to use your monthly rent payment to boost your credit score.

If you put your rent payment on credit, the best way to improve your credit score is to pay your credit card bill in full each month. This way, you won’t be stuck with a credit card balance that could increase your credit utilization rate and lower your credit score. Plus, your on-time payment history will prove to lenders that you can manage credit responsibly.

If you prefer to make your rent payment by writing a check or setting up a direct debit from a checking account, you can always use your monthly rent check to boost your credit. All you have to do is register with an alternative credit reporting service that reports rent payments to credit reporting agencies.

Experian RentBureau, for example, allows you to include monthly rent payments in your Experian credit file. And if you also want to add your utility, telecom, and streaming payments to your credit report, consider signing up for Experian Boost.

The bottom line

If you’re using your rent payment to qualify for a credit card sign-up bonus or to earn credit card rewards, putting your rent on credit might be a smart move. But before you decide to pay rent on credit, make sure you’re not paying more in fees than you earn in rewards. You’ll also want to pay your credit card bill in full before your rent payment turns into long-term debt. Otherwise, your biggest monthly expense could end up costing you even more.

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