Mar

7

Paying Rent By Credit Card?

March 7, 2008 |

Master Card and Visa LogosToday I read for the first time that people are paying rent by credit card.  I must have been out of this world for a while, as it seems it has become a common practice.  I am a landlord of two properties and never heard of it, yet it seems to be widespread.

The advantage to the landlord is that it is scheduled.  Scheduled bills tend to be paid more promptly than unscheduled ones.  When people have financial difficulties they ussually pay their scheduled bills and those for which they have to write a check are the ones who get delayed.

The advantage to the tenant seem enticing at first glance:

  • Delayed payment - you have a month to pay, finance charge free, if you pay your balance every month.
  • Points, miles, rewards.
  • Peace of mind - your payment will be on time, no matter where you are or how much money you have in your bank account.  Worry free.
  • Time - Saving time.  More time to do fun things, less time to worry about money.

This convenience for both has its drawbacks.  The more obvious is that if a bank is offering a service, they want some money for it:

Some electronic rental payment services simply pass the service charges onto consumers and landlords certainly do the same with credit card services, but that’s likely to encourage fewer renters to pay by credit card. -Realty Times

What has me the most concerned is that there is a potential here for falling behind on credit card payments.  A single month where you can’t pay the full balance and this snowfalls into a situation where you can never stay interest or finance charge free.  If you miss paying your credit card balance in full one month, you will still pay finance charges for your purchases until you clear your card in full again.  A potential to pay interest on top of the convenience charge that you paid for the credit card payment or your landlord passed to you in some way or another.

More than that, it is a potential for getting people into deeper debt.  Maybe getting people into bigger appartments they can afford.  We already made the mistake once by making homeownership way to easy.  We do not want to make the mistake again by making luxury appartment renting way to easy.

As a consumer I would avoid this. Now… as a landlord I kind of like it. 

 


Comments

6 Comments so far

  1. Lulugal11 on March 7, 2008 7:37 am

    First of all thank you for linking to my article. The payments work for me because I do not carry the rent payment as a balance on my credit card. I have a card that is at a zero balance that offers me cash back on all purchases.

    I used to write a check for rent so now I just write the rent check to the credit card and use the card to pay the rent. The payment goes to the card within the twenty days grace period so I do not get interest charges on it and then the card goes back to zero.

    I would only recommend this for people who are very disciplined as consumers….but if people are careful I would not discourage them from using cards to pay rent.

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