Paying rent every month is a big expense that you bear. Thinking of paying it through a credit card has come to everyone’s mind every now and then. But will it be a good decision or not? Rent is a big expense and paying it with a credit card should be made after considering every factor. Credit cards come to the rescue during the cash crunch when you have no funds and the due date is approaching. Before you jump right into rent payment with a credit card here are some factors that you need to consider and the pros & cons as well. 

Factors to consider before paying the rent with a credit card:

Given below are a few important factors that a credit cardholder must consider before paying the rent with a credit card:

Fees and Charges: This one is the most important factor that you must not neglect. There are credit card that charges a processing fee on the rent payment transactions. The processing fee can range from 2% to 4% and you may end up paying more instead of saving. A credit card should help you save money rather than add to your expenses. 

Rate of Interest: Since rent is a big expense and paying it with a credit card will lead to a high credit card bill. If you do not pay the credit card bill on time then it will start to incur interest on it and you will end up in big fat trouble. As it will not only lead you to a debt trap but will also affect your credit score. 

Impact on Credit Score: Rent payment transactions have both negative and positive impacts on your credit score. The credit score will only rise when you keep using your credit card to pay the rent and you pay off the credit card bills on time as well. In other circumstances, where you do not pay back the credit card dues will only affect your credit score negatively. 

Advantages of paying rent through a credit card: 

There are certain advantages of paying rent through a credit card and they are:

  • You will never have to feel that you are facing a cash crunch situation with a credit card. So, you will never have to worry about missing the due date of your rent payment. 
  • With a credit card, you can register for rent auto-pay. With this facility, you never miss the due date of your rent payment and you can pay the bill later on.
  • There are credit card issuers who let the credit cardholders earn reward points or other incentives on the rent payment transactions. You also get credit card rent payment offers on certain credit cards, so check before you start using a card. 
  • Since credit cards are flexible to use, you can easily improve your credit score with them.

Disadvantages of paying rent through a credit card:

After knowing the advantages, you must also be aware of the disadvantages of paying the rent with a credit card and they are as follows:

  • We all know that rent is a bigger transaction and using a credit card to pay it every month directly affects your credit utilization ratio as it increases it. 
  • If you miss the credit card bill due date repeatedly then it has the capacity to impact your credit score negatively.  
  • Apart from the rent amount, there will be a processing fee which will increase your expense and you will require to pay more than required. 

Additional Reading: How To Manage A Credit Card On A Low Income?

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