Paying rent using a credit card is fast gaining popularity thanks to convenience as well as being able to earn rewards. It is, however, necessary to be aware of the process, advantages, and disadvantages prior to deciding on using your credit card to pay for rent. The purpose of this article is to elaborate on different ways to use a credit card to pay for rent, advantages and disadvantages, and considerations before using this mode.
Can rent be paid using a credit card?
There exist a few landlords and property management companies that allow for direct payments from credit cards. The mechanism is simple but will typically include processing fees as well, which will typically get forwarded to the tenant. The processing fees could be between 2% to 3% of rent and will likely wipe off any reward that has been achieved by making payments using the credit card.
If your landlord is not accepting credit card, you can pay using third-party websites such as Plastiq, PlacePay, or Rent Track. These websites permit the payment of rent through a credit card but do so at the cost of transaction fees, typically 2.85% to 3%. The Bilt Mastercard is an exception in that it provides rewards on rent payment without extra fees when paid via eligible platforms such as Venmo or PayPal.
How to pay rent with a credit card
There are websites like PayZapp, Housing.com, and Magicbricks where you can pay rent through your credit card. You generally have to register on these websites, enter your landlord’s bank details, and connect your credit card for payment.
- Registration process: Register on the website, enter your landlord’s account details, and enter your credit card details.
- Payment process: Input rent amount, choose your credit card, and authorize the transaction through your PIN or OTP.
Advantages of credit card payment of rent
- Convenience: Credit cards provide an easy method to pay rent without using cash or checks.
- Rewards and cashback: Credit cards generally give rewards or cashback on transactions, which can be helpful for big payments such as rent.
- Credit score improvement: Paying bills on time will enhance your credit score since credit card accounts are reported to credit bureaus.
- Interest-free period: Credit cards typically have an interest-free period, and this will enable you to better manage cash flow.
Disadvantages of paying rent with a credit card
- Transaction fees: All the options have transaction fees, which will offset the rewards benefit.
- High credit utilization: High rent payments can make your credit utilization ratio go high, which negatively affects your credit score.
- Interest charges: If you do not pay the credit card bill in full, you will have to pay too much interest charges.
It is a smart move to pay rent through a credit card, if you are using it wisely. It is handy and rewarding but one should also view the charges and the impact it could have on your credit report. If you know what you have with you and view the pros and cons, you can take the correct decision based on your finance. Always make sure that the benefit is greater than the drawback to keep your finance easy.
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