Should you pay rent with a credit card?

Should you pay rent with a credit card?

Today, “GenZ makes only 1 in 7 payments by cash, compared to 1 in 3 prior to 2020,” according to FNBO, and it has left many of them wondering, “Can I pay rent with a credit card?”

While Gen Z is far from the only group paying rent, tenants across the nation like the convenience and benefits of credit card payments. First, when digital options are available, they don’t have to go to the bank to withdraw cash or buy a cashier’s check. Second, and more importantly, many credit cards offer cash back and travel rewards that make the first of the month a little less painful.

With that in mind, TurboTenant breaks down the pros and cons of paying and collecting rent via credit cards to help you determine if it’s the right move for you.

Benefits of Paying Rent with a Credit Card for Tenants

Paying rent with a credit card offers several advantages, primarily flexibility. If you don’t have enough cash in the bank to pay rent when it’s due, using a credit card can give you some wiggle room to avoid missing a payment.

And depending on your card, there are personal benefits worth considering.

Rewards

Credit cards typically offer a range of rewards for account holders. Some incentives include cash back, travel rewards, and 0% APR, meaning there is no interest on balances or transfers for a set period.

For example, if you pay rent with a credit card that offers travel rewards, each rent payment can help you put aside some money for your next trip.

Credit Building

If you’re starting to build your credit score, remember that you won’t have an official score until six months of consistent payments and data are available. However, once you consistently make on-time payments on your card charges, including your monthly rent, your score will improve.

Plus, putting your monthly rent on a credit card isn’t the only way to boost your score. Several companies offer rent reporting services that will report your on-time payments to credit bureaus. When you use these tools in conjunction, you could see your score improve quickly.

Buying More Time

Since credit cards don’t have to be paid off until you get your monthly statement from the credit card company, paying your rent with a credit card can help alleviate financial stress.

Of course, everyone’s pay schedule is different, and some people may not receive their paychecks until later in the month, while rent is typically due on the first of the month. Putting rent on your credit card can help reduce stress and make the monthly calendar change easier to manage.

How to Pay Rent with a Credit Card

Communicating with your landlord during difficult times will enable open, honest conversations so you can both find a solution to pay rent on time, either by developing a payment plan or negotiating alternative options.

Renters can easily pay rent with a credit card via online rent collection accounts set up by their landlords using rent collection software. It’s a secure, effective way to pay rent online that benefits both parties. Plus, many companies offer free, easy-to-set-up software that helps landlords professionalize their rent collection processes without paying anything out of pocket.

But if you’re a tenant, be sure to take this into account: When you pay rent with a credit card, it is vital to keep up with your credit card bills as best you can so you don’t hurt your credit score or incur interest on the amount owed. Luckily, paying rent on the first of the month when bills are typically due at the end of the following month allows you time to pay yourself back.

Some other easy things you can do if you’re using a credit card to pay rent are: First, avoid charging other expenses to your credit card; second, set reminders for when rent and your credit card payments are due.

If you’re concerned about processing fees, consider linking your bank account to pay rent via ACH, which typically incurs no fee.

Digital Rent Payments Mean More On-Time Payments

As noted above, landlords should communicate with renters before rent is due to avoid missed payments, which can be detrimental to both parties. If you’re wondering how to collect rent online as a landlord, there are helpful guides that show you how.

Collecting rent online offers many benefits and, as the world moves toward more contactless transactions, is increasingly necessary. When you can meet your tenants where they are, you’ll encounter less friction, leading to more on-time payments.

Pros and Cons of Accepting Credit Cards for Rent

The more types of rent payments you accept, the more likely it is that your tenant will have an easy way to pay you each month. However, there are additional factors to consider when deciding if you’ll accept credit card payments:

Pros

• Convenience: If your online rent payment system supports automatic payments, a credit card is one of the most convenient ways for a tenant to pay rent. Most also won’t have to worry about overdrawing their account.
• Improved credit score: Paying rent on time with a credit card (and then paying that card off regularly) helps your tenant build credit. When paired with rent reporting services, tenants get a double benefit.

Cons

• Risk of fraud: Credit cards can be stolen, which is always a consideration when accepting this payment method. Using a verified, reputable payment processor will mitigate that risk.

Being flexible is crucial — landlords should consider halting late fees and interest on rent payments, and offering partial payments if there is a valid reason from the tenant. If a tenant approaches you to negotiate rent, there are various payment plans and alternatives to consider.

Regardless of what you choose to do, ensure your lease agreement reflects current rent payment plans and methods so both parties are held accountable.

What Is the Best Credit Card To Use for Rent?

When it comes to credit cards, you should always do your research to learn what will work best for your lifestyle and financial situation. Cards that give you cash back are extremely popular and can be helpful in times when you have more month at the end of your money.

Travel rewards, on the other hand, are great for those who are spending money on flights and other travel expenses.

Remember, building credit takes time, and it’s important to take credit card payments seriously, as they can affect your rental process, loans, and other future investments.

Overall, paying rent with a credit card offers many benefits for renters when used wisely. If you’re struggling to make rent payments using cash or checks, talk to your landlord about collecting rent online so you can pay with a credit card to not only buy yourself more time in the month but also boost your credit score and collect rewards.

Paying Rent with a Credit Card FAQ

Is it safe to pay rent with a credit card?

Yes, it is safe to pay with a credit card as long as you are going through a secure site where your information is encrypted.

Should I pay rent with a credit card or a debit card?

With a debit or a credit card, a processing fee is usually collected. Obviously, it is up to your financial situation to see if you have enough funds in your checking account to pay your rent — debit cards will instantly draw cash from your accounts, while credit card bills won’t be due until the end of the period.

Does paying rent with a credit card impact my credit score?

Paying for rent with a credit card is like any other credit card purchase — as long as you stay within your allowed limit and pay your credit card bills on time, your credit score can be positively impacted. If you are late on credit card payments, however, this can affect your score negatively.

Disclaimer: This blog is for informational purposes only and is published by TurboTenant. It is not legal, financial, or tax advice. Laws and regulations for landlords vary by state and locality and may change over time. Always consult a qualified attorney, accountant, or local housing authority before making decisions related to your rental property. The publisher and authors assume no responsibility for actions taken based on the information provided.

This story was produced by TurboTenant and reviewed and distributed by Stacker.