The Pros and Cons of Paying Rent with a Credit Card

Title: The Risks and Rewards of Paying Rent with a Credit Card

Paying rent with a credit card to earn travel rewards and bonuses may seem like a smart financial move, but there are hidden costs and risks that could outweigh the benefits.

While the idea of earning points for a vacation by simply paying your rent is appealing, the fees associated with using a credit card for such a large expense can quickly add up. Landlords often pass on transaction fees to tenants, which can be as high as 3.5%. If your credit card only offers 2% cash back or similar rewards, you could end up spending more money in fees than you earn in rewards.

According to Brian Kelly, founder of The Points Guy, if you’re paying more in fees than you’re getting back in rewards, it’s not a good deal. The math simply doesn’t add up.

However, there are exceptions to this rule. The Bilt credit card, for example, allows you to earn travel rewards for paying rent without incurring transaction fees. This unique benefit has attracted over one million users, mostly young adults, within just 18 months of its launch. Despite the popularity of the card, waiving transaction fees is costly for banks like Wells Fargo, with the card costing them up to $10 million monthly.

While some credit cards offer enticing sign-up bonuses that can outweigh monthly perks, the risk of accumulating debt is a significant concern. High interest rates can quickly negate any rewards earned, with the average credit card interest rate hovering around 22%.

Before deciding to pay your rent with a credit card, it’s crucial to crunch the numbers and ensure you can pay off your balance immediately to avoid interest charges. Compare the fees you’ll pay with the rewards you’ll earn to determine if it’s truly worth it in the long run.