Forget what your parents told you: Credit cards shouldn’t be just for financial emergencies. Credit cards offer flexibility within your budget, more protection than a debit card and the possibility of earning rewards. You have a lot to gain by billing your expenses. But what about your rent or mortgage payments?

“Paying your rent or mortgage with a credit card will probably cost you more than it’s worth,” says Rebecca Gramuglia, personal finance expert at the rebate website. “As a general rule, mortgage lenders do not accept credit card payments directly. »You may need to use a third-party payment processor to pay with a credit card, which means you may be charged 2-3% fees.

Benefits of using a credit card to make rent or mortgage payments

If charging your rent or mortgage to a credit card is costing you money, why do it? Sometimes you can still get out on top. Here are a few cases where it might make sense.

This could help you meet credit card spending requirements. Numerous rewards credit cards offer bonus points to new cardholders who reach spending thresholds within a certain period of time. If you are considering a airline card this gives you a big bonus points if you spend $ 2000 in the first few months after opening an account eg high rent could help you reach that goal and get free flights.

“I used this approach specifically to meet the minimum spending requirements on the rewards cards,” says Maggie Germano, Founder and CEO of Maggie Germano Financial Coaching. “My monthly expenses outside of rent weren’t enough to earn the rewards, but putting my rent on credit cards allowed me to hit those minimums.”

Current rewards could exceed penalties with the correct card. Rewards credit cards are a great way to earn points and get cash back on purchases you need to make anyway. If your rewards rate is higher than the fees you would pay with your credit card, this might be a good option.

That said, the typical cash back rate on a rewards credit card is 1%, so you are more likely to lose money as the fees for using a credit card are usually higher. students.

It gives you flexibility. Using a credit card to pay your rent or mortgage can be a good option if you find yourself strapped for cash and have to float the bill until payday.

However, this is not ideal. If you can’t pay the balance by the end of the month, you pay interest on your rent or mortgage on top of the upfront charges. This can easily turn into a debt problem it’s hard to dig, especially if you regularly spend beyond your means.

Even so, most people find themselves in a difficult financial situation from time to time. A credit card is a safer option than abusive payday loan. Just keep in mind that relying on your credit card regularly is a sign that a bigger financial problem probably needs to be addressed.

Disadvantages of paying by credit card

Despite the advantages, there are some disadvantages to paying your rent or mortgage with a credit card.

The typical charge for paying your rent or mortgage with a credit card is around 3%, according to Germano. “For me, that made my rent about $ 30 more per month,” she says. However, Germano says it was worth the extra cost at the time because the credit card rewards she was earning were worth more.

The best way to assess whether paying a fee to use a credit card is worth it is to do the math.

Increased use of credit

An important factor that affects your credit score is your credit utilization rate. This measures how much credit you actually use versus the total amount of credit you have. For example, if you have a credit card with a limit of $ 5,000 and you have a balance of $ 1,000, your credit utilization rate is 20%.

If you charge your mortgage or rent payments to your credit card on top of your other expenses, your balance will likely increase significantly, Gramuglia explains. “As a result, your credit utilization rate will increase, which doesn’t look good for credit card companies and other lenders.” This can happen even if you pay off your balance every month, as your balance is often reported to the credit bureaus on the closing date of your statement, not on the due date of your payment.

Having a balance on your credit card means pay interest in addition to the cost of your rent or mortgage payment. With the average minimum credit card interest rate of around 17% to 24% according to US News research, not paying rent of $ 2,000 on the due date would mean adding $ 28 more interest to the following month’s balance.

“Make sure you always have enough money to pay off your credit card each month,” says Germano. “Using a credit card to pay your rent is not a free pass. If you’re worried about your ability to pay off your credit card, continue paying through your checking account. “

One potential downside to billing your rent or mortgage through third-party services is that you can’t deliver the rent check yourself. “You have to put the address of your owner or management company in the program, and they cut and mail the check directly,” says Germano. “My landlord received my check a month late and I had no way of proving it was mailed and delivered on time. I ended up paying late fees.

To make sure you don’t nullify the benefits of paying your rent or mortgage with a credit card, process your payment well in advance of the due date.

Tools that let you pay rent with a credit card

The following third-party tools and services allow you to pay your landlord using a credit card. In some cases, your payment activity may also be reported to one or more credit bureaus, allowing you to build good credit by paying your rent on time.

  • Take advantage. This software for landlords also offers tenants the option of paying rent with a credit card. The service charges 3.5% per transaction. If your landlord chooses to sign up for CreditBoost, your on-time payments will also be reported to the credit bureaus. Keep in mind that this also allows homeowners to manually report overdue payments over 30 days.
  • Comfortable. This property management software allows tenants to pay their landlords via a debit or credit card for an amount of 2.75%. As an added bonus, rent payments are reported to Experian, so you can build your credit by making payments on time. The only problem is that your landlord will also need to register to use the service. But don’t worry: it’s free for owners.
  • Place. Place is another online service that allows tenants to split costs among roommates and pay rent with a bank account or card. Debit and credit card transactions cost 2.99%.
  • RadPad. RadPad lets you charge rent to a debit or credit card, as well as split the rent between roommates. Your landlord is not obligated to use the service for you. Credit card transactions are a flat 2.99%.
  • RentMoola. RentMoola takes the concept of paying rent a step further by offering rewards in the form of MoolaPerks, which can be redeemed for purchases, travel, and other purchases. This service requires approval from your property manager and costs 2.99% per transaction.
  • RentTrack. RentTrack reports payments to the three credit bureaus so you can build credit to pay your rent on time. Credit card payments cost 2.95%.
  • SparkLocation. This service eliminates the need for paper checks by depositing tenant credit card payments directly into their landlord’s account. Both parties must register for the service. Renters pay a 2.99% fee.
  • Venmo. The Venmo peer-to-peer payment app lets you send money to just about anyone for just about anything. If you can persuade your landlord to accept rent payments through Venmo, you can charge the transaction for free or pay 3% to charge your credit card.

Tools that let you pay off your mortgage with a credit card

While there are several tools that allow you to pay rent with a credit card, the options for paying your mortgage with a credit card are much more limited. There is really only one service that allows you to do this right now: Plastiq. This service allows you to debit a credit card for expenses that you would traditionally write a check for, such as your tuition, taxes, rent, and – yes – your mortgage. Plastiq sends the check on your behalf. The cost of using the service is 2.5% or less of the transaction amount.

Keep in mind that before you embark on this path, your card network and your issuer, as well as your mortgage lender, must all explicitly authorize it.

Paying your rent or mortgage with a credit card is generally not a habit encouraged by personal finance experts. But if you’re a responsible spender and have a lucrative rewards card, paying with your credit card could be a smart financial decision. It’s up to you to calculate the numbers and decide if it’s worth it.