If you’re still writing a check to pay your rent and dropping it off at your landlord’s house every month because you’re not getting sucked into paying that extra 55 cents to mail it (saving you a whopping $6.60 a year), you’re a little behind the times. Or maybe your Fred and Ethel don’t trust (or understand) mobile payment services.
These days, many property managers, especially large-scale ones, allow you to pay your rent online by linking your bank account or credit card to their web portal. Or maybe your hipster Swedish food photographer landlord who lives upstairs is more than happy to accept your rent via Venmo.
And while most mortgage lenders won’t directly accept credit cards, there still are ways to use your plastic for your mortgage payment. But should you?
Here are a few of the pros and cons of making your rent or mortgage payment with a credit card.
Pros of paying your rent or mortgage with a credit card
Earn rewards
If you’re trying to bolster your credit card rewards, using your credit card to pay for your rent or mortgage may seem beneficial. Housing is likely one of the largest payments you have, and large payments stand to earn the biggest rewards.
But keep in mind that it’s nearly impossible to avoid paying a fee. Just make sure that whatever rewards you’re earning outweigh the fee you’re being charged, otherwise it might make more sense to use your debit card, a check, or another form of payment that won’t cost you even more than the already-outrageous price you’re paying to keep a roof over your head.
Hit your sign-up bonus
One instance where paying that fee may be worth it is if you’re trying to capitalize on a sign-up bonus on a new credit card. These offers typically require you to spend a certain amount in the first few months of opening your account, and because your rent or mortgage is a high-ticket item, this can help you reach that spending threshold to secure the bonus.
Cons of paying your rent or mortgage with a credit card
Creating more debt
Using a credit card to pay your mortgage is literally using a loan to pay for a loan. It’s never advisable to finance a payment that you can’t afford. If you don’t have the money in the bank to turn around and pay off your credit card before getting hit with interest, it doesn’t make sense to pay for your mortgage with a credit card.
If repaying your debt is already an issue, one of the first steps to effectively paying off your debt is deciding on a method that works best for you. The debt snowball method, debt avalanche method, or a hybrid method can work depending on your motivations and goals.
Fees
Finding a landlord or management company that doesn’t charge a fee for a credit card rental payment is like finding a suburban dad not wearing New Balances. And these fees can quickly add up over the course of a year.
Avoiding a fee on a mortgage payment made with a credit card is even more difficult. Most mortgage lenders don’t allow borrowers to pay their rent with a credit card, but there are third-party providers like Plastiq and Radpad that allow you to charge your mortgage payment for a fee of 2.5%-3%.
Unless you really need a way to hit your sign-up bonus, think of using a credit card for your rent or mortgage payment as a last resort—like taking your cousin to the prom.