Upon entering the real world for the first time, one of the most shocking things to many young people is often the exorbitant cost of housing.
Whether you rent or pay a mortgage, you’re looking at an average of at least $800 a month — assuming you don’t live in an expensive city.
With so much of our monthly wages going toward that roof over our heads, it seems a shame to miss out on potential credit card rewards. But paying your rent or mortgage with a credit card isn’t always straightforward. Read on for some important considerations and tips on how to pay your rent or mortgage with credit cards. Weigh the pros and cons and decide whether this approach is a good fit for you.
1. Confirm Your Landlord/Bank Accepts Credit Cards
Your landlord or bank is the first impediment to paying your rent or mortgage with your credit cards. Individual landlords are unlikely to accept credit card payments. Either they don’t possess the ability to do so, or they can’t stomach the credit card processing fees charged to merchants. Even larger rental organizations, such as apartment complexes, are often unlikely to want to lose as much as 3.5% of their rent to a credit card company just for the privilege of having the payment processed.
Finding a bank or mortgage lender that directly accepts credit card payments is also challenging. For example, mortgages from Chase cannot be paid directly by credit card; the bank only allows payments from a Chase account, transfers from other banks, checks, or money orders.
Even if your bank or landlord does accept credit cards, some credit card issuers prohibit using their cards for mortgage payments.
Moreover, some entire credit card networks won’t process mortgage payments through their networks. Visa and American Express both reportedly prohibit mortgage payments made by credit card from being processed on their networks, though debit and prepaid card payments are allowed.
All fees aside, banks and credit card companies are largely against processing mortgage payments via credit card because cardholders essentially pay a debt by creating more debt. Mortgage loans are a form of debt — and so are credit cards. Paying off one using the other is just moving debt around.
On the plus side, rent isn’t generally regarded as a debt. Therefore, most card issuers and networks allow rental payments by credit cards.
2. Watch Out for Costly Third-Party Fees
Although most landlords and banks won’t (or can’t) accept credit cards, several third-party companies allow you to use a credit card to make rent or mortgage payments. Essentially, you pay the company with the method of your choice, and the company sends the payment as an ACH payment or paper check to the party you designate. Unfortunately, these companies charge pretty stiff fees for the service, up to an average of 3%.
The high fees associated with third-party rent or mortgage payments can easily override any potential rewards you might earn for the purchase with your credit card. And few, if any, credit cards will offer bonus rewards for rent, mortgage, or online payments. Think of it this way: You pay your mortgage with your favorite 2% cashback card. A third-party company charges you a 2.5% fee for the payment. And you’re in the red by 0.5%.
3. Use a High-Earning Credit Card for the Most Value
The best way to counteract the high fees for paying your rent or mortgage with a credit card is to use the highest-earning card you have in your wallet (or acquire a new one for the occasion).
If you play the points game, you might go for your favorite points card, but the per-point value will vary drastically depending on how you redeem. A cashback card is more straightforward, offering attractive rewards rates for one or more bonus categories, depending on the card you choose.
Additional Disclosure: Citi is a CardRates advertiser.
This card is currently not available. Additional Disclosure: The information related to Chase Freedom Flex℠ credit card has been collected by CardRates.com and has not been reviewed or provided by the issuer of this card.Chase Freedom Flex℠
4. Weigh the Signup Bonus Against The Transaction Fees
As a savvy credit card user, you also might want to pay your rent or mortgage with a credit card to meet the spending requirement for a juicy signup bonus. Some cards require a minimum $3,000 spending in a 90-day period, which can be tough if you don’t have many expenses.
Since housing payments typically make up at least a third of the budgets of most consumers, making those payments with your card can take you a long way to the spending requirement. In this scenario, the associated fees are outweighed by the long-term reward.
The cards below routinely offer inticing signup bonuses. Check current offer details to determine whether the card meets your spending and credit-building requirements.
As one might expect of an elite card with a somewhat exclusive cardholder approval process, the Chase Sapphire Reserve® historically offers high-value signup bonuses to attract new customers. But remember: The higher the signup bonus, the higher the spending requirements, typically.
Similar to its sibling, the Chase Sapphire Preferred® Card also regularly features high-value signup bonuses. If you can meet the spending requirement in the specified timeframe, however, the rewards will likely outweight the cost of any transaction fees.
The minimum spending requirement for some cards may be more accessible than others. We urge readers to compare popular card offers, heeding the advice of finance experts, and pull the trigger on a card that makes the most sense for your personal situation. The top-dollar signup bonus may not be the best deal long-term.
5. Prepare for Payments To Be Coded As Cash Advances
Unfortunately, the third-party processor that handles your credit card payment may not be the only source of fees when it comes to paying your rent or mortgage.
In some cases, your credit card issuer may interpret your payment as a form of cash advance. Not only does this mean big cash advance fees, but your payment will start accruing interest right away — often at a higher rate than normal purchases.
Using those handy convenience checks often provided by your credit card company is the surest way to incur big cash advance fees. Although it seems like an everyday check, convenience checks are always treated as cash advances by credit card companies.
6. Business-Related Rents/Mortgages May Also Qualify
One of the largest chunks of a business’s overhead is often office space, be it leased space or a building owned by the business. Happily, business owners can often use the same third-party platforms to pay their business’s rent or mortgage with their favorite business credit card.
Of course, keep in mind that the same potential limitations apply to business rent or mortgage payments as for consumer payments, including only being able to use certain payment methods for some types of payments.
The Ink Business Preferred® Credit Card Card is a popular choice of many businesses. Transferable to a number of travel partners, points earned with this card can be particularly lucrative for frequent travelers.
The Ink Business Cash® Credit Card is consistently ranked among the top cashback cards for businesses. Cardholders earn bonus rewards in a range of useful categories, maximizing your credit card usage.
This card is currently not available.Capital One Spark Cash for Business
Finally, the Capital One Spark Cash for Business is our recommendation for those seeking a no-frills business rewards credit card. When in doubt, stick with simple.
7. Be Patient: Payments May Take a While to Arrive
When you have to wait for money to change hands more than once, say goodbye to day-before deposits or last-minute payments
“If you select a recipient in our system, they will be funded by ACH/EFT (electronic bank transfer) in 2-3 business days. If your recipient is manually added, they will be funded by check in 5-7 business days.” — Plastiq
With some services, the payment can be processed and delivered in just a few days. In other cases, you’re looking at a week or more before your payment reaches its final destination. So, if your rent or mortgage is due on the first of the month, you’d better start the ball rolling ASAP to avoid late fees.
Convenience vs. Cost: Is It Worth It?
Although it’s one of the big four — along with air, water, and food — shelter is often the most expensive human need. And paying that big housing bill is even more frustrating for credit card rewards enthusiasts who see thousands in rewards going unearned each year.
But while you can find ways to pay your rent or mortgage with a credit card, even one that earns rewards, it isn’t always the most worthwhile procedure.
Unless you have a card with points that you value above the amount of the processing fee or are working toward a big signup bonus, you may want to skip the plastic. Stick to old-fashioned checks to pay your rent or mortgage.
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Editorial Note: Our site content is not provided or commissioned by any credit card issuer(s). Opinions expressed on CardRates.com are the author's alone, not those of any credit card issuer, and have not been reviewed, approved, or otherwise endorsed by credit card issuers. Every reasonable effort has been made to maintain accurate information; however, all credit card offer details, including information about rewards, signup bonuses, introductory offers, and other terms and conditions, is presented without warranty. Clicking on any offer on CardRates.com will direct you to the issuer's website, where you can review the current terms and conditions of the offer.
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