If you’re a landlord or a tenant, you may have wondered about paying rent with a credit card.
Tenants–maybe you’re looking to rack up some credit card rewards and get a signing bonus or get a little more wiggle room in your budget by putting the rent on credit for a few months.
Landlords, you might be eager to offer a more convenient solution to your tenants for getting their payments in on time.
While paying for rent with a credit card may seem enticing, it’s rarely a good idea. There are options out there, but they all come with excessive fees that make using a credit card less appealing for landlords and tenants alike.
Here’s a brief overview of everything you need to know.
Property Management Laws
Most importantly, you need to know the law and what payment types landlords are required to take. According to Arizona tenant laws, landlords and property management companies are not required to accept credit card payments for rent.
It’s up to you and your company if you want to accept credit card payments directly, which you may want to do to offer a higher level of convenience to your tenants.
Fees for Paying Rent With a Credit Card
If landlords or property managers decide to accept credit cards, it’s important to understand that there will be fees associated with accepting credit cards.
These can add 2.5% to 3% to the total transaction. Further, this cost will usually be passed directly to the tenant unless the landlord decides to cover the cost.
For individual landlords, the process of getting set up to accept payments can also be cost-prohibitive. Property management services may offer tenants more options while also streamlining the rental process for tenants and landlords alike.
When Does It Make Sense to Pay Rent With a Credit Card?
The fees associated with paying the rent with a card are much higher than even the best credit card rewards programs. If you do the math in most cases you’ll lose out.
The exception to this is if you’re trying to meet a minimum amount of charges to earn a large signing bonus that offsets the increased fees. But be sure to crunch the numbers and check that you’ll actually make more from the bonus than you’ll spend on fees.
Another case where it might make sense to pay with a card is if you won’t have enough money to pay rent on time. Missing or late payment can impact your credit score, not to mention put you at risk for eviction.
Both of these situations have significant financial impacts. So if putting your rent payment on a credit card can help you stretch your budget in times of low cash flow, it may make sense for you to go this route.
What if My Landlord Doesn’t Accept Credit Cards?
Even if your landlord does not accept payment by credit card, there are other ways to charge it to the plastic if you’re really determined.
There are third-party apps that enable users to write checks using funds charged to credit card accounts. Again, these apps have associated fees, often higher than 3%.
Main Take-Away: Don’t Charge It
Unless you’re going to earn a major credit-card signing bonus or you’re really hurting for cash, paying rent with a credit card just doesn’t make financial sense.
Are you a landlord and don’t want to deal with the nitty-gritty details like accepting credit card payments? Look into finding a property management company to help handle this and other aspects of renting out your property.