Is it Good or Bad to Pay Rent using a Credit Card?

Rent payments are one of the highest expenses you may incur in a month. At certain times, you may find it difficult to pay the rent on time. Under such circumstances, the rent can be paid by using your credit card. However, there are many advantages and disadvantages to paying the rent with your credit card.

Given below are some of the pros and cons of paying your rent by using a credit card:

Advantages of Paying Rent with Credit Card

The main advantages of paying the rent by using a credit card are mentioned below:

• Helps you save cash in case of any financial difficulties. You will also be given a certain amount of time before interest is levied.
• You can earn various bonuses and rewards by using a credit card to pay the rent.
• Standing instructions can be set. Therefore, the rent payment will not be missed.
• You can improve your credit history and credit score by paying the credit card bills on time.
• The reward points that are earned can be redeemed at a later period for various discounts.
• Your liquidity can be increased in case the rent is paid on time.
• Flexibility is provided when the rent is paid by using a credit card.

Disadvantages of Paying Rent with Credit Card

The main disadvantages of paying the rent by using a credit card are mentioned below:

• If the credit utilisation is high, your credit score will be impacted. In case you have a low credit score, you may find it difficult to avail a loan or a new credit card in the future.
• At certain times, you may not be able to pay the entire credit card bill. Non-payment of the bill will impact your credit score.
• You may miss a payment in case the card has expired or you have exceeded the credit card limit.
• Your credit score will be impacted if you use the card on a continuous basis.
• The interest that is levied on credit card payments is very high.
• Extra charges may be levied by the credit card company.

Important Factors to Consider before Paying your Rent by using a Credit Card

Some of the important factors that must be considered before you pay the rent by using a credit card are mentioned below:

• Impact on the Credit Score: Since the credit utilisation is increased by paying the rent with your credit score, this will have an impact on your credit score. The credit utilisation ratio is an important factor to determine your credit score.
• Interest: In case the credit card bill is not paid in full, interest is levied on the outstanding balance. The interest that is levied will pile up over a period of time.
• Processing Fee: Banks generally charge a processing fee in case the rent payment is made via a credit card. The processing fee may vary between 2% and 4%. Hence, you will end up paying a higher amount.

It is important to consider various factors before you pay the rent by using a credit card. Paying the credit card bill in full is important as it will improve your credit score and history. High interest rates are also levied in case the credit card bill is not paid in full.