Using a Credit Card to pay rent: the pros and cons

It’s important to consider the fees, interest charges and potential impact that a credit card can have on your credit score, before deciding to pay your rent with one. It’s also important to consider how you use your credit card, and if you usually pay off your statement each month before incurring interest. Due to rent being a large household and/or business expense, it can increase the size of your monthly credit card statement. If not managed carefully, it can cause increased interest charges and potential debt. Building your credit card reward points, as well as rewards offered by certain payment platforms, each time you pay rent may seem like an appealing prospect. But how does it work, and is it worth it?

How to pay rent with a credit card?

This will depend on the options your rental agency or landlord gives you in regards to credit card payments. Many of the platforms listed below offer payment through their website via online portals or apps.

What platforms allow you to use your credit card for rent?

Some agents have been turning to third-party platforms to outsource the rental payment process, and in doing so have provided avenues for their tenants to pay by credit card.

These services require tenants to pay surcharges for each credit card transaction and may also carry membership and payment processing fees.

DEFT

This platform is owned and operated by Macquarie Bank and allows users to pay rent with their credit card. It offers convenience and security, rather than a rewards program. You can also sign up for an account and use other payment options. They charge a $0.85 fee per transaction, as well as have a 1.50% Visa credit, 1.20% Mastercard credit and 1.50% American Express (AMEX) card surcharge. To use DEFT to pay rent, your agent or landlord must be a registered biller. Many agents from large real estate franchises, such as Harcourts, Ray White and LJ Hooker, as well as many independent agents and landlords, currently use the DEFT system.

Pay.com.au

Pay.com.au is a business owner focused platform that allows users to earn points from bills paid through the site. Bills can include rent, payroll, taxes and superannuation. PayRewards Points are earned for every $1 processed through the site (fees apply). Their PayRewards Points can then be exchanged for points from several different airline and hotel reward programs. They offer a free membership, as well as regular and premium memberships, which cost $85 and $165 per month respectively. These paid memberships allow users to access better fee rates, as well as booking concierge and advice services. For the free membership, Pay.com.au charges a 1% Mastercard credit, 1.2% Visa credit and 2.10% AMEX fee on transactions.

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RentPay

RentPay users can earn cashback on electricity and gas bills if they are an Origin customer; and up to 15% off retailers such as Coles, Bunnings, Woolworths and Uber Eats with the Paylab app.They also offer a feature which can help you increase your credit score while using the service. They charge a $2 monthly fee and 0.99% transaction fees for both Visa and Mastercard credit payments. RentPay works without needing your agency or landlord to sign up, as they align the payment to their preferred method, be it BPAY/DEFT or Bank Transfer/OSKO.

Rental Rewards

This platform allows tenants to pay their real estate agent through one-off or recurring payments once they have registered online. It has a $1.51 set up fee, a monthly membership fee and other associated card fees. According to Rental Rewards, agents from some of the leading real estate groups in Australia, including Ray White, Raine&Horne and Professionals, offer the service to tenants.

One of the highlights of this service is the ability to use your credit card, with the payments not being treated as cash advances, therefore earning points towards selected rewards programs. Rental Rewards also offers 1,000 Qantas Frequent Flyer points each year for using a participating card.

Sniip

Sniip is an app that allows you to pay any bills, including rent, with your credit card. Business and rewards credit card holders may find this app more beneficial, as it requires you to have one to be able to earn the relevant points. Sniip charges no monthly account fees for personal or business usage. Transaction fees vary, with personal usage fees for Mastercard and Visa credit incurring a 1.5% surcharge and AMEX personal cards a 1.29% surcharge.

The pros and cons of using your credit card for rent

Pros

• You could earn rewards points.
• Payment convenience – you can pay online or via an app in some cases.
• It may assist in meeting your minimum spend to earn bonus rewards points.
• It could help you build your credit score if you make payments on time.

Cons

• Fees and surcharges could outweigh the benefits you may receive from redeeming reward points.
• Putting payments on your card which you may not have the capacity to pay off in time could lead to high interest costs and increased debt.
• It could lower your credit score if you don’t pay your card balance on time.

What other bills can you pay with your credit card?

Generally, you can pay with your credit card, your electricity, gas, water, internet, phone and insurance bills. It’s important to note that this can help you build up points with a rewards credit card, but it can also lead to financial strain if not managed correctly.

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