Can you pay your rent with a credit card? Better yet, should you?
“Nowadays, consumers can pay most of their bills with a credit card,” said Experian. “Even stores that used to require cash or debit cards allow credit cards. But one hurdle remains: rent. Many tenants still have to use old-school checks to pay rent, even when credit cards are almost universally accepted elsewhere.”
It’s true, landlords are among the last to embrace credit cards. But that doesn’t mean it will always be that way. It might only take one conversation to get him or her to see the benefits of making the switch, like having a faster and easier way to collect rent instead of trekking to the mailbox or post office box every day, waiting for a check to arrive.
If your landlord won’t budge, you can always use a service like Plastiq, which allows you to pay with a credit card, even in places where they’re not accepted. Of course, you’ll want to keep in mind that there is a 2.5% fee for this service.
The key to making rent payments with a credit card is taking advantage of bonus offers and points. “Many cards offer sign-up bonuses if you spend a certain amount with 90 days and for some people, that minimum can only be reached if they pay rent with the credit card,” said Experian. “If you sign up for a credit card with a $200 bonus if you spend $5,000 in three months, putting your $900 rent payment can help you reach that minimum spend.”
The combination of bonuses and points help you earn rewards for things like travel and gifts, and may also be able to be redeemed for cash. “Credit card blogger Keith Rosso bought a $60,000 Tesla with a credit card last year using the Chase Ink Business Preferred,” said CNBC. “That earned him 3 points per dollar on the purchase, which outweighed Plastiq’s 2.5 percent fee. Depending on how he redeemed those rewards, he estimated that they could be worth as much as $5,000.”
Two of the top cards in terms of rewards are the Discover it® Cash Back, which offers up to 5% cash back “at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.” There is a 1% bonus on other purchases. The Blue Cash Preferred® Card from American Express has a more tiered cash-back bonus structure, with as much as 6% back, up to $6,000 (then it drops to 1%) and a $250 bonus.
Managing your credit card
Once you have secured a credit card with a rewards structure, you’ll want to use it to its best advantage. Pay attention to the small print; American Express isn’t the only card with tiered rewards. It may behoove you to use it everywhere you can if you’re at least getting a 1% cash back reward, but, if you’re planning to use it more sparingly, get the best bang for your literal buck. It may be that you get a higher percentage of cash back at restaurants, so perhaps you reserve the card for when you eat out. You’ll also want to check with your lender if you are thinking about buying a home so you don’t ding your credit by taking out a new credit card or running up your balance.
Look for added extras and stacked bonuses, too. There are often special bonuses for using cards at gas stations, and if there is one connected to your supermarket, you may be able to save money on gas once you get to a certain threshold with your grocery spend.
Once you do buy a home, you can pay your mortgage with your cash-back card and continue racking up those points. This couple “paid $100,000 of their mortgage with a credit card and earned $2,000 in rewards.”
They also found a creative way to get around that 2.5% fee for using Plastiq; “Plastiq waives the fee on $1,000 in purchases for every person you refer to the service who makes a qualified payment over $500,” they said on CNBC. “This strategy worked so well for me because I have referred almost 300 people now with my website. At $1,000 in fee-free dollars per referral, that is $300,000 in fee-free payments I have earned.”