Paying your rent with a credit card might sound like a smart way to rack up travel points or cash back – especially when you’re already spending a large sum each month. But while the appeal is obvious, financial experts warn that the convenience could cost you more than you think – including a hit to your credit score.
According to credit specialist John Ulzheimer, formerly of FICO and Equifax, using a credit card for rent payments should only be considered under very specific circumstances. “It’s not inherently a bad idea,” he says, “but the risks can outweigh the rewards if you’re not strategic.”
Why paying rent with a card is rarely free
In the best-case scenario, your landlord accepts credit cards and doesn’t charge a processing fee – but such arrangements are exceedingly rare. Most landlords either don’t accept cards at all or pass on processing fees to tenants. These charges typically range from 2.5% to 2.9% of the payment amount.
Online rent payment platforms like Plastiq and PayPal offer an alternative, but they also charge similar fees. For example, paying the national average rent of $1,471 with a 2.5% fee adds nearly $37 per month – or more than $440 over a year. Even if your credit card offers rewards, these fees can easily cancel out any potential earnings, especially when you factor in annual card fees.
Does your reward value beat the cost?
Before charging your rent, consider how much value you’re truly getting. If you earn 1.5% cash back but pay a 2.5% fee, you’re already operating at a loss. Things get worse if you carry a balance and start paying interest.
One of the only situations where this move could make sense is when you’re chasing a generous welcome bonus. Many premium credit cards offer thousands of points after spending a few thousand dollars within the first few months. If your rent helps you hit that spending target – and you’re able to pay it off immediately – the bonus could outweigh the processing fees.
Strategic sign-up bonus spending
Take, for instance, the Chase Sapphire Preferred® Card. New users can earn 100,000 bonus points after spending $5,000 within the first three months. That bonus can be worth up to $1,250 when redeemed through Chase Travel. Charging rent for a few months could help you hit the required spending threshold quickly – just don’t turn it into a long-term habit.
Ulzheimer cautions, “You’re essentially making a large purchase every month. If you only make minimum payments, your balance will balloon quickly, and so will your interest charges.”
High utilization can lower your credit score
One often-overlooked consequence of putting rent on a credit card is how it affects your credit utilization ratio – the percentage of your available credit that you’re using. Utilization plays a significant role in credit scoring models, and experts recommend keeping it below 30%.
Let’s say your card has a $5,000 limit and your rent is $1,000. That’s already 20% of your limit, and additional purchases could push you past the 30% mark quickly. High utilization can trigger a drop in your score, even if you pay on time.
To avoid this, you could request a higher credit limit before using your card for rent, or designate a separate card solely for the rent transaction to better manage your ratios.
When credit is your only short-term option
There’s one scenario where using a credit card might be justified – during a financial emergency. If you’re short on cash and facing eviction, using your card might buy you time. But this should be a temporary measure only, and you should have a realistic plan for paying off the balance in full by your next billing cycle.
If you’re already struggling to pay off existing card debt, adding rent to the mix will only dig the hole deeper. Between high interest rates and growing minimum payments, the convenience of plastic can quickly turn into a long-term burden.
As Ulzheimer puts it, “If you can’t pay the balance in full every month, you shouldn’t be using your credit card for rent in the first place.”
At the end of the day, paying rent with a credit card can be a clever financial move – but only in very specific situations. For most people, the safest and most cost-effective approach remains the traditional route: paying directly from a bank account, with no fees and no credit risk attached.
