Using a Credit Card to Pay Rent – The Pros and Cons

Building your credit card rewards each time you pay rent may seem like an appealing prospect. But is it possible to use your credit card for these payments? With the fees involved, is it worth it?

Can you pay your rent with a credit card?

The bottom line is when it comes to payment of your rent, it depends on whether your real estate agent or landlord offers credit card options. If you are unsure, contact your rental agency or landlord and discuss the payment methods available to you.

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 tenants to pay by credit card.

These services require tenants to pay surcharges for each credit card transaction and may also carry membership or payment processing fees. Here is some more information about three major players in the Australian industry:

Rental Rewards

This platform allows tenants to pay their real estate agent through one-off or recurring payments once they have registered online. One of the highlights of this service is the ability to use your credit card and earn bonus rewards points on selected credit card rewards programs such as those offered by BankWest or Heritage. Rental Rewards also offers Qantas Frequent Flyer members extra points each year for using their participating card. In order to use the service a tenant would have to ask their agent to sign up to the platform.

Agents using Rental Rewards

According to Rental Rewards, agents from some of the leading real estate groups in Australia, including Ray White, Century 21 and Professionals, are actively promoting the service to tenants at the time of writing.

Fees involved

Rental Rewards currently charges tenants the following fees for membership and card use –

  • Set-up fee: $1.51
  • Membership fee: $5 a month
  • Card payment convenience fee: 1.1% of the transaction value
  • Card transaction fee: $2 per transaction
  • Premium and corporate card fee: $10 per transaction over $500 (for select cards)
  • Card payments over $3,000: Will attract a single fee of 1.76% per transaction

Surcharges also apply for credit card payments as follows –

  • Visa/Mastercard: 1.45% surcharge
  • American Express/Diners Club: 2.65% surcharge

DEFT

This platform is owned and operated by Macquarie Bank and allows users to pay rent with their credit card or over the phone. You can also sign up for an account and use other payment options. To use DEFT to pay rent, your agent or landlord must be a registered biller.

Agents using DEFT

Many agents from the 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.

Fees involved

Current surcharges for credit card payments are as follows –

  • Visa/Mastercard: 1.50%
  • American Express: 3.30%
  • Diners Club: 3.773%

iPayRent

This online portal offers tenants multiple payment options for their rent, including credit card, and gives them the freedom to pay through a recurring schedule or in one-off payments. To use this service, a tenant’s agent or landlord must be signed up.

Agents using iPayRent

According to their website, iPayRent is currently the preferred supplier for agents from Ray White, LJ Hooker and Professionals.

Fees involved

Currently, a surcharge of 2.2% applies to all credit card payments.

If you’re interested in a new rewards credit card, you can compare on the Canstar website. You can see a snapshot of the current rewards credit cards available on the comparison table below, with links direct to the providers’ website. Please note that this table has been generated based on a $3,000 monthly spend, and is sorted by Star Rating (highest first) and then alphabetical order.

The pros and cons of using your credit card for rent

Possible pros

  • You could earn rewards points
  • Payment convenience – you can pay over the phone or online with the click of a button
  • May assist in meeting your minimum spend to earn bonus rewards points, if applicable – read the terms and conditions of your credit card provider to see if they offer a bonus point system and if rent is an eligible purchase
  • Could help you build your credit score if you make payments on time

Possible cons

  • Likely to incur fees and surcharges that could outweigh the benefits you may receive from redeeming the points
  • Putting payments on your card, which you may not have capacity to pay off in time, could risk leading to debt
  • Could lower your credit score if you don’t pay your card balance on time, potentially resulting in an increase in interest rate

An example

To further break down the potential pros and cons of using your card for rent consider the following example –

A renter using a Qantas Frequent Flyer Visa Card through DEFT to pay $600 a week in rent.

  • If they earn 1 Qantas Frequent Flyer point per $1 spent that would equal 600 points earned a week and 31,200 points a year, assuming their rent stays the same throughout the year.
  • 5% surcharge on $600 a week rent, equals $9 extra a week in fees.
  • Over a year that is $468 in fees for 31,200 points.

At the time of writing using the Qantas Points Calculator and Qantas Rewards Store, you could use 31,200 points for:

Type of Reward

Points

Added Fees & Charges (incl. Taxes)(approx.)

Total Cost if Bought Outright (approx.)

Return flight Sydney to Hamilton Island

24,000

$103

$390

One-way flight Brisbane to Tokyo

28,000

$333

$898

KitchenAid Precision Press Coffee Maker

29,260

N/A

$149

$100 Visa Gift Card

26,890

N/A

$100

Based on the above, exchanging points plus paying the added fees ($333) and the credit card fees for a year of paying rent ($468) for the international one-way flight to Tokyo at the time of writing would likely save the cardholder $97 ($801 vs $898). However, the value of the domestic return flight, the coffee maker and gift card may not present a positive return on investment, as their approximate total cost is less than the fees paid.

What this means

To decide if using your credit card to pay rent is worth it for you, it all comes down to what rewards you can get from putting that spend on your credit card and how that aligns with what you want, and the total fees involved in the payment process.

Consider these variables and make sure to read the terms and conditions of your credit card redemption program along with those of the payment platform involved.

Compare Credit Card Rewards

Cover Image Source:  Elena Kharichkina (Shutterstock)

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