Should I Pay My Rent With a Credit Card?

Imagine all the airline miles you'd earn. And then keep imagining because it's still not worth it.
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Imagine all the airline miles you'd earn. And then keep imagining because it's still not worth it.
(Photo: 401(K) 2012/Flickr)

(Photo: 401(K) 2012/Flickr)

Oh hey there, first of the month. You again? Great. Let me find my checkbook. And a stamp. And a pen. And the rent slip, which my building’s management company sent to my old roommate who moved out and now lives a mile away. The point being, paying my rent is annoying. There has to be a better way, right?

Let's take this a step further. For many people, rent is their single largest expenditure of the month. Wouldn't it be nice to be able to pay by credit card and accrue whatever type of points you can get? The average price of a studio in Brooklyn is $2,000 a month, which would amount to, if like me you wanted to use a United Airlines card, 24,000 miles per year. (I know, I know.) That's just about enough for a round-trip flight from New York to Los Angeles in January where I could high-five my editor Ryan, convince him to pay me more, and wonder why I lived in a place where I had to pay $2,000 a month for a tiny studio. (Editor's Note: This is a terrible idea.)

There are roughly 100 units in my building, all of which need to send paper checks every month. That's a hassle for the tenants, but more so for the building ownership that needs to employ someone to process them, track down non-payers, and send out rent slips.

As it turns out, at least a couple different places offer the ability to pay rent by credit card. One of the simplest is RentShare, which allows each roommate to pay his or her own share of the total, either with a bank account or a credit card, and sends the entire total in a separate check to the landlord. "Setup auto-pay and never worry about logging in again!" the site proclaims. (It also allows people to share expenses like utilities: "No more chasing roommates for pizza money!")

That all sounds great. Except there's one problem: RentShare, and other services like it, pass the credit card fee along to you, charging 2.9 percent. With a rent of $2,000, that's $60 per month. Not outrageous, but certainly enough to make you think about the convenience of the service and the cost of those miles. Case in point, from Million Miles Secrets:

Paying a fee to earn miles or points on a credit card is often a poor value. That’s because the miles and points are worth much less than the (2% or higher) credit card convenience fee. For example, you pay a 3% fee on your New York apartment rental of $2,500, but earn 2,500 American Airline miles. You’ve effectively paid $75 (3% X $2,500) for 2,500 miles. This is not a good deal because you wouldn’t normally pay that price (3 cents per mile) for an American Airline mile.

Essentially, there are better ways to earn miles than paying extra to pay your rent with your credit card. But we're likely to see the trend of paying by means other than check continue to increase, and that means more credit card payments. According to a story posted on Fox Business, 70 percent of renters pay by check, but the number of paper checks decreased from 41.9 billion in 2000 to 18.3 billion in 2012. Companies realize there's an opportunity, and they are flocking into the market to take advantage.

RentMoola.com is another option. While the company charges 2.75 percent, still high, they offer perks through their partnerships with companies like Zipcar and Amazon. They also give management companies the option of paying the fees, which they can choose to pass along to their tenants or not.

In some ways, that might be the future. There are roughly 100 units in my building, all of which need to send paper checks every month. That's a hassle for the tenants, but more so for the building ownership that needs to employ someone to process them, track down non-payers, and send out rent slips (to the wrong address, in my case). Would it be worth it financially for them to pay an additional three percent to have money show up automatically on the first of every month? Or maybe they could split it with the tenants. I would certainly be more inclined to pay 1.5 percent than three. That might make the miles calculus turn out in my favor.

Of course, paying by credit card has another drawback: the chance to run up debt. "As a personal finance consultant and former real estate professional, I cannot advise paying rent with a credit card, nor can I endorse the practice," Anthony Kirlew, founder of personal finance blog FiscallySound.com, told CreditCards.com. "Sadly, the pattern for many is to charge with good intentions, fail to plan for unexpected life events, then take the easy way out with a bankruptcy and start the cycle over again."

On second thought, maybe I'm better off just sending a check.

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