5 critical action steps every first-time homebuyer must know
David Bach’s
arrow First-Time Homebuyer Challenge
Get Access Now Learn More

Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

By Martha C. White
April 23, 2020
Kiersten Essenpreis for Money

More and more Americans — some financially strapped, others just stuck at home — are putting their monthly rent on credit cards. While the move can save you hassles, and maybe even help you score perks, there are big risks too.

With 26 million Americans filing for unemployment insurance over the past five weeks, looming rent and mortgage payments are at the forefront of many people’s minds. Bruce McClary, spokesman for the National Foundation for Credit Counseling, says the organization has been fielding roughly 50% more calls and online requests for help from people trying to manage new and existing debts.

As property owners and landlords face a cascade of people suddenly struggling to cover their bills, a growing number are making it more convenient for renters to pull out the plastic. According to the Wall Street Journal, one property-management software platform reported that rent payment via credit card spiked by 13% in April, while a digital payments processor found a 30% jump in credit card usage. (It is typically not possible to pay a mortgage with credit card.)

Ads by Ad Practitioners
When your budget is tight, a Personal Loan could lend you a hand.
With some extra funds, you can pay bills or anything you might need help with. Click on your state and apply for a personal loan now.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Start Now

Convenience…and points

Switching to plastic — as opposed to snail mail — can seem like an expedient move, while much of the country is hunkered down and apartment management offices aren’t necessarily open to process paper checks. The Journal notes that some landlords are proactively offering to waive the processing fee (usually around 2% to 3%) they usually charge for payments made via credit card.

In theory, using a credit card to pay rent (minus a transaction fee) can be a new way to accumulate a cache of rewards miles or points. Especially if your day-to-day spending has dropped — which it likely has — charging a rent payment can make up that shortfall in your rewards balance.

“If you’re looking to earn points under normal circumstances, and you could otherwise afford to make your rent payment using cash but using your credit card will help you move towards earning more rewards faster, that’s a great idea, as long as you’re paying off the balance quickly,” McClary says.

Big risks too

That caveat — that you pay off the balance in full when it’s due to avoid paying interest on top of your rent — is an important one. In spite of the Federal Reserve knocking its benchmark interest rate to around 0%, McClary says that APRs on existing credit cards are hovering around 15%, while APRs for new card accounts can push up into the 20% range.

Obviously, if your income stream has dried up, adding an interest payment puts you at risk of compounding your financial distress. Even if you’re waiting on unemployment benefits, processing delays being reported by many states make it a gamble to put your rent on plastic.

If you’re considering using your credit card to pay rent, McClary offers a few pointers: If your landlord hasn’t already offered to waive the processing fee, contact them and ask before paying. And don’t take out a cash advance and pay your rent that way, because APRs for cash advances are generally higher, and many don’t have a grace period, so you start accruing interest charges right away.

And don’t forget, McClary adds, that your credit card company might not be your only option. “An alternative would be to turn to your bank or credit union if you have to borrow and see if they have any emergency assistance loans they might be offering,” he says.

Ads by Ad Practitioners
Personal loans have lower interest rates than most credit cards - in fact, you could save 10% on more on interest alone.
Click here to check out your options today!
Start Today

More from Money:

Best Balance Transfer Credit Cards of 2020

The Coronavirus Quarantine Can Be Hard on Relationships. Here Are 5 Affordable Couples Counseling Options

The CARES Act Makes It Easier To Withdraw from Your 401(k). Here’s What to Know Before You Do

You May Like