Can You Pay Rent With A Credit Card? And Should You?
Rent. It’s the biggest expense for most people. Therefore any return should be maximized. What’s the best way to save money off your rent? Well, usually it is with a promotion through employment or it can be due to introductory offers. When I first moved to the USA, being part of an “Emergency services” profession enabled me to get 50 dollars off a month. Currently with the organization I work for now, I get much bigger discount, which I believe may be more like 300-350 dollars. That’s the first thing you should do once you like a property and now you are weighing your options (remember the 3 rules, convenience, fun and fairness). It pays to be in a fun neighborhood but also convenience is going to play a big part. For example, I lived right next to my work in New Jersey, so it was a little more expensive compared to staying further out…but I didn’t a need a car. We will talk about that another time.
So once you have decided to pay for rent and negotiated the best rent, what else can we do. What about the idea of using a credit card? There are several options, one, the rental company simply doesn’t allow it. This makes life somewhat easier to be fair.
Option two, they allow a payment but there is a fee. I wouldn’t recommend this, although in some scenarios it may be worth it. Let’s say that there is a 1% fee. Now if you use a credit card and the cash back you get is 2% like the Citi double cash card: https://www.citi.com/credit-cards/credit-card-details/citi.action?ID=citi-double-cash-credit-card&category=savings-and-cash-back-credit-cards&afc=1A8&intc=7~7~67~1~MCT~1~CMSDefaultOffer
That’s a 1% difference, which I personally think is worth it (try to get as much back as possible). However be aware of your credit card limit on purchases, and your credit card utilization (both of which impact your credit score and can worry potential issuers in the future. There are other credit cards that can be used, but like I said the cash back percentage has to be more than the fee. At my first apartment, it was 3%, which meant that I had to find a credit card offering a cash back of more than 3% to make it worth it, which is highly unlikely of EVER happening. Although credit cards can give cash back at a higher percentage, the chance of rent falling under that category (the typical ones are groceries, travel, dining), is very unlikely, but double check the category on your statement if you make a payment and it economically makes sense.
The last option is, there is no fee. Now this is great, I had colleagues staying in accommodation where you could pay with a credit card with no fees. This is great if you have a high limit and of course can pay it off (the number one rule with credit cards). It also provides a quick way to reach spending thresholds for an introductory offer bonus, e.g spend $2000 in 1 month. A rent of $1000 suddenly makes that target feasible. These bonus offers may also make the second option discussed above more attractive if you want to hit a quick threshold and get bonus cash back or points. However, usually it would be better to plan your spending on other purchases that would not have a fee associated with them (exams, membership dues, vacation packages)
So once you have your negotiated your rent and the apartment/house is the place for you, definitely ask about payment options, you will be surprised how much money you could save in the right circumstance.
Till next time Penny Pinchers!