Melissa Lambarena
Using a credit card to pay your rent has its advantages. For starters, you don’t have to go through the trouble of writing a paper cheque and waiting for it to be cashed.
Plus, it gives you flexibility. If your rent is due before payday, you can cover the expense with your card and pay yourself back when your paycheque arrives, all while avoiding an awkward conversation with your landlord about late fees.
Even if your landlord doesn’t accept credit card payments, you still have options. Some rent payment services will facilitate credit card payments — for a fee. It’s convenient, but it may end up costing you more than you would have paid if you’d simply opened your chequebook.
How to pay rent with your credit card
Several services offer tenants the option to make rent payments online. Some require your landlord’s involvement, while others don’t.
PLASTIQ
✘ Does not report to credit bureaus
✘ Does not require your landlord’s involvement
Plastiq lets you pay your landlord with a credit card, and it doesn’t require them to have an account. You pay Plastiq a fee for the service, which is typically 2.85% of your payment. Payments can be made manually or scheduled automatically. Plastiq then cuts your landlord a cheque or delivers an electronic payment.
PAYTM
✘ Does not report to credit bureaus
✔ Requires some landlord involvement
Paytm lets you pay bills, insurance, taxes, utilities, rent, and more with your credit card. Transactions earn you Paytm points, which are redeemable for in-app rewards. The service fee for credit card transactions varies: 3% for American Express and 2% when using a Visa or Mastercard credit card (except when paying taxes). Credit card payments are processed in 1-3 business days. Your landlord does not need to create an account, but you will need some details, like their bank account number, to add them as a payee.
TENANTPAY
✘ Does not report to credit bureaus
✔ Requires landlord involvement
TenantPay is a service that integrates with mobile banking to let you pay rent using your credit card or cash, or through your bank or credit union. You can also use the Paytm app to pay via TenantPay by searching for payee “TenantPay”. TenantPay is convenient, but your landlord must also use the service. To use TenantPay, contact your property manager for your 14-digit TenantPay number. There are no additional fees and you can earn credit card rewards or in-app Paytm points.
RENTTRACK
✔ Reports to a credit bureau (Equifax)
✔ Requires landlord involvement
RentTrack reports your rent payments to Equifax as a new account on your credit profile. To use the service, you will need to verify your identity and get your landlord on board. Then you can pay your rent using a credit card or an Electronic Fund Transfer (EFT), which RentTrack will use to pay your landlord through direct deposit. To receive the benefit of credit reporting, you must pay a monthly subscription fee. Before you make your decision based on this feature, ask your landlord whether he or she already reports your rent payments to credit bureaus or to the Toronto-based Landlord Credit Bureau (LCB), which passes on payment information to Equifax. If your landlord asked you to pay rent through RentTrack, you might have to pay a processing fee on each payment — this depends on whether your landlord is willing to cover the cost.
PAYPAL
✘ Does not report to credit bureaus
✔ Requires landlord involvement
You can also pay rent through PayPal. If you use a credit card, it will cost 2.90% of your payment plus a fixed fee of $0.30. Your landlord will need to have a PayPal account to receive the personal transaction. You won’t receive any special perks for using this service, and it will not report your rent payment to a credit bureau. If you use the money in your PayPal account or a linked bank account, transfers are free.
CASH ADVANCE
✔ Reports to a credit bureau
✘ Does not require landlord involvement
If rent is due and a credit card is your only option, a cash advance can get you the cash you need. Before you make this decision, check to see what kind of fees and interest your issuer will charge you. Interest rates are almost always higher for cash advances. Since interest is charged daily, and there is no interest-free grace period, pay the cash advance back in full as soon as possible.
CREDIT CARD CHEQUES
✔ Reports to a credit bureau
✘ Does not require landlord involvement
Also called convenience cheques or promotional cheques, credit card cheques are another expensive way to borrow and should only be considered when absolutely necessary. Like a cash advance, interest rates are high and you will start paying interest as soon as you use the cheque.
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Factors to consider before paying rent with a credit card
Although paying rent with a credit card is convenient, it may not be the best move for your budget. Consider the following factors first:
FEES
Some rent payment services tout the opportunity to earn incentives for paying rent with rewards credit cards, but the processing fees can outweigh any reward earnings. If you have a rent payment of $1,000 and you’re paying a 2.99% processing fee, that’s an additional $29.90 every month — which adds up to a whopping $358.80 per year.
Credit card reward rates vary, but they usually won’t exceed the cost of the fee. One exception: Your rent payment can help you meet the spending requirement for a hefty credit card sign-up bonus. But use this strategy with caution so you don’t rack up an unmanageable balance.
Some of these services offer electronic funds transfers for free, or you could simply ask if your landlord would accept an Interac e-Transfer, but both options mean you’ll lose the flexibility of paying with a credit card. In some cases, ordering cheques from your bank and paying your rent the old-fashioned way may still make the most sense.
» MORE: Common types of credit card fees
INTEREST PAYMENTS
It can be tempting to put your rent on a credit card if you want to free up that money for something else, or if you can’t afford it that month. But if you don’t pay your credit card bill in full every month, the interest charges on your ongoing balance can pile up. Add those to the processing fees you pay for the convenience of using a credit card to pay rent, and your total costs escalate.
EFFECT ON YOUR CREDIT SCORE
Paying rent with a credit card could affect your credit score by increasing your credit utilization ratio — the total amount of debt you have compared with your available credit. If, for example, you have a $10,000 credit limit and a $5,000 balance, your credit utilization would be 50%.
Your credit utilization ratio is a key factor in your credit score, so typically you should aim to keep it low, generally no higher than 35%. But putting thousands of dollars in rent on a credit card can temporarily push that ratio higher.
Of course, if you’re struggling or experiencing an emergency and have no other immediate option, it may be necessary to pay rent with a credit card. As long as you keep up with your payments and can pay down the balance over time, your credit score will eventually bounce back.
Still, aim to exhaust all other options before going that route.
If you want to pay rent with a credit card, consider doing it with the credit card that has the lowest interest rate, and try requesting a credit limit increase from your issuer first. And then, of course, pay off the balance in full every month, or contribute as much as possible.
Should you pay rent with your credit card?
If you’re looking for flexibility and want to avoid the hassle of writing cheques, paying rent with a credit card can be a good option — especially if you pay your credit card bill in full every month and you’re earning rewards that can help defray the cost of convenience fees.
But if you have a low credit limit or your income is unstable, putting your rent on your credit card could be risky. It could hurt your credit score and your wallet if you fail to pay it off in time. Weigh the pros and cons and make the best decision for your situation.
» MORE: How to pay bills with your credit card
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