How to Pay Rent With a Credit Card

Paying rent is typically your largest monthly expense, and traditionally it's been handled through methods like checks or direct deposits.

However, more and more renters are exploring the option of paying rent with credit cards for convenience, rewards, or to manage cash flow.

At KOHO, we understand that modern financial solutions should work for your lifestyle, so let's explore the ins and outs of paying rent with a credit card.

Why consider paying rent with a credit card?

Potential Benefits:

• Earn rewards: Using a rewards credit card for rent payments could help you accumulate points, miles, or cash back on your largest monthly expense

• Better cash flow management: If your rent is due before payday, a credit card can provide flexibility until your next paycheck arrives

• Build credit history: Regular on-time payments of large amounts can potentially help strengthen your credit profile

• Convenience: Avoid writing checks or setting up multiple bank transfers

Methods to pay rent with a credit card

1. Direct Landlord Acceptance

Some landlords and property management companies now accept credit card payments directly. Check if your landlord offers this option, but be aware they might pass on processing fees to you.

2. Third-Party Payment Services

If your landlord doesn't accept credit cards directly, several payment services can facilitate this:

• Payment processors that send checks or electronic payments to your landlord on your behalf

• Rent payment platforms specifically designed for this purpose

• Mobile payment apps that support rent payments

3. KOHO's Rent Reporting

With KOHO, you can pay your rent and build your credit history and get 0.25% cashback simultaneously through our Rent Reporting feature.

This allows you to make your monthly rent payment while reporting it to credit bureaus like Equifax to help build your credit profile.

Important considerations before paying rent with a credit card

Processing Fees

Most payment services charge processing fees ranging from 2.5% to 3% of your rent amount. On a $1,500 rent payment, that's an extra $37.50-$45 monthly.

Calculate if any rewards earned outweigh these fees.

Impact on Credit Utilization

Putting large rent payments on your credit card will increase your credit utilization ratio, which could temporarily impact your credit score.

Ensure you have sufficient credit limit to accommodate rent charges without approaching your credit limit.

Interest Charges

If you can't pay your credit card balance in full each month, you'll incur interest charges that will quickly eliminate any benefits from rewards and significantly increase the cost of your rent.

Is paying rent with a credit card right for you?

Consider these questions:

• Can you pay off your credit card balance in full each month?

• Do the rewards or benefits outweigh any processing fees?

• Does your credit limit comfortably accommodate your rent amount?

• Would a temporary increase in credit utilization negatively impact any upcoming loan applications?

Alternatives to consider

Split Payments with Roommates

If you have roommates, consider services that allow you to split rent payments automatically, reducing the individual burden on each person's finances.

Tenant Insurance Protection

While exploring rent payment options, don't forget about protecting yourself and your belongings with KOHO's affordable Tenant Insurance, starting at just $22 per month.

Making the smart choice

Paying rent with a credit card offers convenience and potential rewards, but it's important to consider the fees and implications for your overall financial health.

If you're looking for the benefits of digital rent payment with the added advantage of building credit history, KOHO's Rent Reporting provides a straightforward solution designed specifically for Canadian renters.