Yes, You Can Pay Your Rent with a Credit Card — But Should You?

With housing costs at file highs, many individuals have tried to seek out artistic methods to assist match their rental or mortgage funds into their already overstretched finances. Generally these strategies embrace making an attempt to finance these month-to-month funds with the assistance of a bank card. And whereas there are some renters who’re in a position to make use of their plastic when the primary of the month rolls round, the monetary consultants we talked to stated that this technique is just not with out its dangers. Right here’s all the pieces that you must learn about making an attempt to pay your lease along with your bank card. 

At the start, Shinobu Hindert, licensed monetary planner and creator of Investing is Your Superpower says you want a landlord or property supervisor who’s keen and capable of settle for the sort of cost. “Many landlords usually are not snug accepting bank card prices due to the charges they incur and so they need to know you’ll be able to meet your month-to-month obligation with out counting on credit score,” she says.

Subsequent, she says you’ll need to test the maths and see if that is actually your finest monetary technique. “Decide if there’s an extra charge to utilizing a bank card on your month-to-month lease funds,” she continues. “Your landlord might cost you transactional charges of two p.c or extra, so it is probably not price the additional bills.”

In terms of truly utilizing your bank card on your lease, Rachel Durci, monetary wellness coach and founding father of Easy Budgeting, says placing your lease in your bank card isn’t any totally different than placing one thing like groceries in your card, because the credit score bureaus don’t know what you’re utilizing your plastic for.

That being stated, Durci wouldn’t precisely advise her shoppers to do that. “That’s a great way to actually rack up debt,” she says. “Somebody wants to verify they’ll afford their most elementary payments with out utilizing a bank card, similar to lease/mortgage, utilities, and meals.”

In the event you’re contemplating paying your lease this fashion for different causes — perhaps you need to make the most of money again choices or acquire journey rewards — Hindert says there are some things you’ll have to be sure you perceive, like the boundaries in your bank cards. “If in case you have a $10,000 credit score restrict in your mixed bank cards, you need to maintain your month-to-month revolving debt underneath $5,000 to make sure your credit score rating isn’t negatively impacted,” she explains, including that you simply by no means need to use greater than half of your accessible credit score in any given month. 

One thing else Hindert says you’ll have to know earlier than you try that is precisely how you’ll cowl these funds when your card’s invoice comes due. “Plan forward to see should you’ll be capable of repay your bank card steadiness every month,” she says, including that should you don’t have the means to utterly cowl what you’ve put in your card you possibly can rapidly end up in a tricky monetary place that will probably be exhausting to get out from underneath. 

In the event you’re certain you perceive the dangers of doing this, Hindert says it is best to hunt down rewards-based bank cards. “Discover out what the cash-back choices are on the bank cards you will have or journey factors,” she continues. “For instance, in case your bank card provides you two p.c money again however your landlord is charging you a two p.c charge to make use of your card, the rewards get canceled out.”

Nonetheless, should you get factors in the direction of free journey utilizing an airline bank card, Hindert says it could be price paying these transaction charges. “Finally, paying your lease with a bank card might be a good way to rack up journey factors or be rewarded with cash-back options, however that you must learn the wonderful print.”

As for the precise playing cards try to be searching for, Durci has a number of recommendations, like Uncover, which she says has a card that can truly match your money again rewards on the finish of the 12 months. “Chase Amazon can be a great one, even should you don’t store on Amazon that a lot as a result of they nonetheless give money again,” she says, including that she prefers cash-back playing cards relatively than miles or present playing cards as a result of you will have extra flexibility on what to do along with your money again, together with placing it proper in your bank card as a part of your cost. 

It doesn’t matter what you find yourself doing, the factor to recollect is that you simply’ll want to have the ability to pay each of those payments on time each month to keep away from having late funds displaying up in your credit score, as these will certainly damage your scores.