Published in: Credit Cards | Aug. 1, 2020
By: Dana George
Before you decide to pay rent with a credit card, consider the pros and cons.
If your finances have been hard hit and you don't know where you'll find the money to pay this month's rent, it's important that you know this: It is possible to pay rent with a credit card. Before you do so, though, make sure you understand how it works, how much it might cost, and what your alternatives are.
Yes, but it's not ideal (we go into some alternatives below).
The process may not be as direct as handing over a credit card. Some landlords accept cards, and others do not. Even if your landlord is firmly planted in the "does not accept credit cards" camp, you can use your credit card to pay through a third-party payment service like Plastiq.
Along with dozens of its competitors, Plastiq allows you to use your credit card to pay for things that cannot typically be charged, like rent. According to its website, Plastiq charges, on average, a 2.85% transaction fee. If your rent payment is $1,000 per month, paying it through Plastiq would cost an additional $28.50. Over a year, that's an extra $342.
What about a cash advance? It's a terrible idea. The average cost to take out a cash advance is 5%. If your monthly rent payment is $1,000, the cash advance fee would be $50. In addition, the average interest rate on a cash advance is 23.68%. To add insult to injury, there is no grace period -- you'd begin paying interest on that money immediately.
It's important to be cautious when deciding whether or not to pay rent with a credit card. As compound interest is added to your debt, you will move deeper into dangerous financial territory.
Millions of Americans are having trouble making rent payments right now. However, paying by credit card can put you into debt and cost you a pretty penny in interest charges. If you haven't already, consider the following instead:
Don't start by paying rent with your credit card and racking up debt. There are many ways to make ends meet that don't plunge you into high-interest debt.
Paying your rent with a credit card may get you out of a short-term jam, but as we saw above, it can be costly.
Of course, if you are facing eviction or considering more drastic measures such as a payday loan, and you don't qualify for any time of government assistance whatsoever, paying by credit card might be your best option.
If you absolutely have to pay with a credit card, consider opening a card with a no-interest introductory period (some offer no interest for as long as 18 months). This can save you hundreds in extra interest charges, as long as you're able to pay off the balance before the no-interest period is over.
Americans have been asking for years if it is possible to pay rent with a credit card. And for years, the answer from most landlords has been "absolutely not."
In all fairness, landlords who refuse credit card payments have legitimate concerns, including:
So the idea of paying rent by card limped along without ever gaining real traction. Occasionally you would hear of a management group that decided to accept credit card payments, but mostly, landlords remained happy with the old-fashioned way of doing things.
And then the pandemic hit.
As coronavirus made its way across the globe, businesses of all kinds have had to adjust. By April, with millions of Americans out of work, some landlords started to see the light. Tenants who couldn't make ends meet offered to pay rent by credit card. And landlords, sweating the thought of months without payments, looked for ways to enable credit card transactions. Some even offered to swallow all transaction fees rather than pass them on to tenants.
Still, many are suffering. If you're wondering how you'll pay for rent, you're not alone. And there are many organizations -- and people -- who are willing to help.
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