With online payment systems like Paylease.com and Click Pay Rent on a rise, landlords and renters alike are trying to make paying rent as easy and seamless as possible. This allows for more flexibility, more concise records of payment, and a chance to boost your credit history. On the other hand, paying with credit card may affect your credit limit and accrue transaction charges. Not sure which option’s best for you? Check out the pros and cons of using a credit card to pay rent online.
Pro. You’ll be more inclined to pay on time. Using a credit card to pay rent means being able to set up auto payments and monthly reminders. If you have a hard time keeping track of the dates, paying with credit card might be a good option.
Con. You HAVE to pay it back on time. If you can’t pay off the entire balance each month, you may rake in some harsh fees. The amount you owe vs. your total credit limit is called your credit utilization rate and you should keep that ratio under 20% or your credit score could suffer. Making late payments can affect your credit report for up to seven years.
Pro. You can build and repair your credit score. Your payment history is 35% of your overall credit score, so as long as you can pay off your balance in full each month you can really boost your rating. Some systems also keep track of your rent and spending, a helpful download if you’re trying to prove your credit.
Con. Potential for high processing fees. Some cards charge higher processing fees than others. Unless your card has a really good rewards program, avoid paying rent with credit cards that charge high processing fees or platforms that take a percentage of credit payments.
Pro. Earn Miles or Points. Some credit cards offer points or miles for every dollar spent. If you’re paying your rent with your credit card, you’re going to accrue more points or miles through your bank. If you aren’t being charged high fees to use your credit card, this is a great way to save money for travel or get cash back bonuses.
Con. Credit Card Max Out. If your credit limit is on the low side, you might want to avoid using your credit card to pay rent. You should aim to always have credit available, and high rent payments could make you max out earlier than you’d planned in a month.
Pro. Flexibility with Payments. Because it’s done online, you don’t have to worry about taking the time to turn in your rent. If you (or your landlord) is out of town when your rent is due, you don’t have to worry about asking for an extension or paying rent early. If you use your credit card you can pay rent from any location and keep a record of your transaction history.
Con. Roommate Decisions. In some cases, landlords may ask roommates to choose one method of payment. If one person doesn’t want to put all of rent on their credit card, you might want to stick with a more traditional way to pay rent.
With new systems and websites for rent payment and bill shares on the rise, it may make sense to use your credit card to pay rent. Before you make your decision, weigh out each option and see what makes the most sense for you. Call your bank to ask if paying rent with your credit card is a good option for you. Make sure to ask questions about charges and processing fees and educate yourself on the payment system your landlord uses. Education is your best friend when it comes to these kinds of decisions.