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So, you’re wondering if it’s wise to pay rent with a credit card for earning points. The short answer is…YES, but only under certain situations. Here are several instances when it makes sense to pay your monthly rent payment with a rewards credit card.
Should You Pay Rent With a Credit Card?
One of the biggest reasons you might not want to pay rent with a credit card is because of the additional fees it costs to process credit card payments. Additionally, some companies may not accept credit card payments. Fortunately, there is one service that can help with both of these issues.
Bilt World Elite Mastercard
The Bilt World Elite Mastercard® lets you pay rent without fees, and it should be your first option to consider because of this valuable benefit. Typically, the transaction fees are 3% of the rent amount. Most landlords or property management companies usually pass this charge onto the tenant.
However, with the Bilt Credit Card, you can earn 1 point per $1 on the first $50,000 in rent payments per year. If your landlord isn’t part of the Bilt Alliance, the payment provider will mail a check or direct deposit your monthly rent amount at no additional cost.
As rent is most likely a significant portion of your household budget, it can easily cause your credit utilization ratio to spike, which can harm your credit score. Additionally, it’s another charge that you must pay before the statement’s due date to avoid interest charges.
To counter both of these potential problems, you can automatically activate BiltProtect which charges the rent payment to your credit card and earns points. Next, Bilt withdraws the funds directly from your bank account within 48 hours to pay off the rent amount.
Cardholder Perks
In addition to earning credit points on rent, you can enjoy these cardholder perks:
- Earn 3x on dining
- Earn 2x on travel
- Rent Day benefits (for example, here were February’s rent day perks)
- Points are worth 25% more when redeemed for travel (1.25 cents each)
- 1:1 point transfers to airline and hotel loyalty programs
- Complimentary travel insurance
- No annual fee
You can earn points on every purchase for the month by completing five purchases each billing cycle.
Unfortunately, this card doesn’t offer a signup bonus, but it can be a small price as it’s the best credit card to pay rent with.
Dig Deeper: What Credit Score Do You Need for the Bilt World Elite Mastercard?
Earning Limited-Time Credit Card Signup Bonuses
Outside of using the Bilt Mastercard, other credit card rent payments incur transaction fees. That is, unless you have a gracious landlord that’s willing to cover the processing fee.
As a result, you should only consider using your credit card when the purchase rewards or the spending bonus are worth more than the fee. So, that means each point needs to be worth more than three cents each.
Typically, this is a challenging feat as the average credit card point is worth 1 cent.
However, one way to outmaneuver this roadblock is by earning limited-time credit card bonuses. Many offers are worth $750 or more, but, they can have relatively high spending requirements. Paying rent during the introductory period can mean the difference in achieving the minimum.
If so, the fees are worth it as you have more to gain than you might lose.
Unfortunately, you won’t be able to use a different credit card each month to have a revolving door of card bonuses, so this tactic may only make sense a few times each year as you qualify for new cards.
Further Reading: The Best Credit Card Offers of 2023
Want to Build Credit
In addition to earning points, using a credit card makes it possible to build credit. Admittedly, this isn’t a guarantee as the credit bureaus don’t award more points for certain transaction types as they analyze your total balance usage and payment history.
To be more likely to improve your credit score from rent, you will need to make sure you pay your balance in full each month. Additionally, you may need to make at least one mid-cycle balance payment to reduce your credit utilization ratio to 30% or less.
Why Can’t You Pay Rent With a Credit Card?
Here are several reasons why it’s not always the best idea to pay rent with your credit card.
Convenience Fees Apply
Credit card processing fees erode your earning potential and can potentially exceed the value of any benefits you receive.
If your property manager accepts credit card payments, compare the total costs by paying with plastic versus a check, money order, or direct deposit.
Landlord Doesn’t Accept Credit Card Payments
It’s not uncommon for small-time landlords to only accept payment by check or cash that can be easily deposited into a bank account by going to a physical branch or by mobile depositing a check.
Setting up the framework to accept credit card payments isn’t worth the hassle which means tenants are out of luck. If your landlord previously said “no,” you may consider the Bilt World Elite Mastercard® which can effortlessly mail a check each month to the rent collector without requiring any special signups from the landlord to proceed.
Too Many New Accounts
If you’re paying rent to earn a signup bonus, you may need to time your application to avoid opening too many cards at once.
Each bank has different credit card application rules, but one common factor is an automatic application denial if you have opened too many new accounts recently.
For example, the Chase 5/24 rule requires applicants to have opened (or added as an authorized user) five or fewer new credit card accounts within the past 24 months.
Application restrictions from other issuers can include applying for at least two cards from the same bank within 30-90 days (varies by platform). Even having too many open accounts from one institution, such as five American Express cards, can be another thing to look out for.
Don’t Qualify for the Signup Bonus
Another reason why you may need to be strategic about using a brand new credit card to pay rent is if you don’t qualify for the introductory offer.
It’s not uncommon for banks to restrict existing or previous cardholders to only earn one bonus every couple of years.
For example, the Chase Sapphire bonus is only available if you currently don’t have a Sapphire card and haven’t earned a previous Sapphire bonus within the past 48 months.
The Southwest credit card offers are another bonus with strings attached. You can only have one personal card open at a time. The waiting period is 24 months between bonuses.
Summary
It makes sense to pay rent with a credit card in select situations, such as when you won’t pay transaction fees, and the points value is higher than any processing fees. Using the Bilt Mastercard or one of the best travel credit cards makes it easier to maximize your earning potential through valuable redemption options.
