The Pros and Cons of Paying Your Rent With a Credit Card

Over the past decade, the number of consumers using credit cards to pay rent has increased. Usage spiked during the pandemic, when consumers utilized credit cards to supplement income; however, many continue to pay rent with plastic out of convenience and to earn credit card rewards. 

While paying for your rent with credit cards can be a great idea, it can also have some downsides. Not all landlords and property management companies accept them, and those that do typically charge a fee. Consider the following pros and cons of paying your rent with a credit card to see if it’s a good move for you. 

Pros of paying your rent with a credit card

Builds your credit history

Landlords and management companies don’t usually report your rent payments to credit bureaus. Unfortunately, that means a pristine rent payment history won’t increase your credit score like on-time mortgage payments would. Since credit card accounts get reported to credit bureaus, putting your rent on a credit card and paying it on time can help build your credit history and boost your credit score.

Offers convenience

Credit cards provide a convenient way to pay your rent — no dealing with cash, and no writing checks and waiting for them to clear. And if you set up automatic payments with your credit card, you don’t have to remember to pay your rent. You can set it and forget it — a great way to automate and streamline your bill-paying process.

Earns you credit card rewards

Paying your rent with a credit card can help maximize cash back, points or other perks your card offers. Since your rent is likely your largest monthly expense, putting it on your credit card can help you qualify for a welcome bonus or get the most out of your ongoing rewards. For example, if your rent is $2,000 monthly and your card offers the typical cash back bonus of 1% or 2%, you’ll get $20 to $40 per month, or $240 to $480 annually.

Maximizes cash flow

Sometimes, paydays and rent days just don’t align. If you need a little extra time to pay your rent, using your credit card can help avoid a late fee with your landlord or management company. Of course, this only helps if you pay the rent in full before your credit card payment is due.

Cons of paying your rent with a credit card

May charge transaction fees

Unlike paying with a check or cash, using your credit card for rent comes with a cost. Credit card companies might charge landlords and third-party services a fee to process transactions. Typically, landlords pass that fee on to you. So, if your rent is $1,700 a month — the average rent in the U.S. — and your landlord charges a 2.5% fee for using a credit card, you’ll have to shell out an extra $42.50 per month, or $510 yearly. 

Can hurt your credit

While putting your rent on your credit card and paying it on time can improve your credit history, it can also hurt some aspects of your credit score. Your credit utilization ratio measures how much of your available credit you use, and it contributes to your “amounts owed,” which determines 30% of your FICO score. Having high credit utilization can hurt your credit score, and since rent is a sizable expense, putting it on your credit card can drive up the ratio quickly. 

Additionally, placing your rent payment on your credit card can eat into your available balance, and any late payments will lower your credit score. 

May incur interest and late fees

If you carry a balance or pay your credit card bill late, you’ll incur interest or late charges — on top of the processing fees. With the average credit card interest rate of 24.59% and late payment fees ranging from $25 to $40, incurring either will make paying your rent much more expensive.

Encourages flirting with debt

If you struggle with paying your rent on time or managing your other financial obligations, using your credit card for rent could lead to relying on debt for your basic needs. Rolling your rent payment over to the next month or partially paying it may start as a one-time event, but it can quickly snowball into a cycle that’s hard to get out of. 

How to decide if you should pay your rent with a credit card

While paying rent with a credit card can provide convenience and a strategic way to maximize credit card rewards, the fees and potential issues may outweigh the benefits. 

To determine if it’s a good move for you, consider your goals, rent payment history and other financial habits. If your priority is convenience or earning rewards, do the math to see if the cash back or bonus value exceeds the fees you’ll pay. If your goal is to build your credit history, you might decide the extra costs are worth it. However, if you struggle to pay your rent or other bills, it’s best to avoid opening the door to a potentially harmful habit.