What are the benefits of making a rent or mortgage payment with a credit card?
It might sound counterintuitive to pay off a large bill like a mortgage or rent with even more debt. However, there are several potential advantages to using a credit card to pay rent or a mortgage.
Earn credit card rewards
If you have a high-earning cash back card or rewards card, using it to pay off large bills like your rent or mortgage can potentially earn hundreds or even thousands of dollars back per year.
Qualify for sign-up bonuses
Paying off large expenses can help you quickly meet spending requirements for big sign-up bonuses.
Cover emergencies
If you don’t have an emergency fund, a sudden life expense might make it difficult to pay your rent or mortgage on time, potentially resulting in costly fees, damage to your credit score, and/or eviction. By paying your rent or mortgage with a credit card you might be able to alleviate temporary cash flow concerns and secure time to get your finances back on track.
What are the drawbacks of making a rent or mortgage payment with a credit card?
Using your credit card to pay monthly bills can help you earn rewards and build up your credit score, but there are also several downsides you should consider before reaching for your plastic to cover housing expenses:
Third-party fees
Most landlords and lenders won’t directly accept credit card payments from their tenants or borrowers, so you’ll probably need to enlist a third-party payment processor to make housing payments with your card. These intermediaries often charge 2.5% or more on credit card payments. If your mortgage is $2,000 per month, that’s $50 in fees per month or $600 annually. If your credit card rewards don’t outweigh this cost by a significant margin, you’re better off using funds from a chequing or savings account to make your housing payments.
Credit utilization
Your credit utilization is the percentage of your total available credit limit that you’re using. Repeatedly using your credit card to pay large expenses can inflate your utilization, and having a high utilization—above 30%—will negatively affect your credit score.
Extra work
Most landlords and mortgage companies don’t accept credit card payments by default, so you should anticipate sending several emails or calling your landlord/mortgage lender to verify that you can actually use a credit card to make your payment. You should also confirm if any third-party payment provider is an acceptable payment method, or if you can only pay via specific intermediaries.
Taking on debt
Another downside of using a credit card for paying your rent or mortgage is that you take on additional debt. If you’re simply looking for credit card points and you plan to pay off your card balance immediately with money from another account, this isn’t necessarily an issue. But sitting on an outstanding credit card balance runs the risk of missing payments and incurring a high interest rate on your debt.
Requires good credit
Many of the best rewards credit cards require a good to excellent credit score or a certain annual household income. If you have a low credit score or shaky credit history, you might not qualify for a credit card that’s worth paying your rent or mortgage with. You can request a free credit report from credit bureaus Equifax or TransUnion if you want to check your existing score.
How to make rent or mortgage payments with a credit card
PaySimply is one platform that lets you pay bills like rent, utilities, property taxes, and your mortgage. Payment options include credit cards like Visa and Mastercard, PayPal, e-Transfers, and cash or debit payments at Canada Post. PaySimply charges a 2.5% fee on all credit card payments. Similarly, Plastiq lets you pay your rent and mortgage via credit card for a 2.85% fee. However, PaySimply is more flexible since Plastiq only accepts Mastercard and Discover cards for mortgage payments.
Alternatively, you can ask your landlord if they’re able to use RentMoola to manage monthly payments. RentMoola helps landlords manage their rental properties, run credit checks, and accept online payments from tenants. For renters, RentMoola lets you schedule recurring payments, earn credit card rewards, and costs 2.5% for rental credit card payments.
Will your landlord or lender accept a credit card payment?
Landlords typically request payment by cheque or money transfer from their tenants. Similarly, borrowers normally pay their mortgage by setting up automatic withdrawals from a chequing or savings account or by completing payments on their lender’s website.
If you want to make your rental payments with a credit card, start by asking your landlord if it’s a payment method they can accept. It’s unlikely that an independent landlord will accept direct credit card payments, and if your landlord is technophobic you might have your work cut out for you convincing them to try new digital solutions like PaySimply or Plastiq.
However, if you’re renting from a rental management company, ask your property manager about acceptable payment methods. Large property management companies may have an online payment portal where you can use your credit card to pay your rent, and they might charge lower fees than third-party processors.
As for paying your mortgage with a credit card, it’s a similar scenario. Mortgage lenders are typically wary of accepting debt-for-debt payments, so it’s unlikely you can make mortgage payments with a credit card without using one of the aforementioned third-party services as the payment intermediary.
What are the best credit cards for paying rent or a mortgage?
The main drawback of making a mortgage or rent payment with your credit card is that you’ll likely incur third-party fees, and your card may not have a high enough rewards or cash back rate to make up for those. Before you make the transaction consider the below options, which might be better designed for making housing payments than your current go-to card.
| Card | Key Feature | Sign-Up Bonus | Annual Fee | Link |
|---|---|---|---|---|
| Scotia Momentum Visa Infinite Card | 4% cash back on recurring bills (up to $25K spent annually) | Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases).¹ No annual fee in the first year, including on supplementary cards.¹ | $120 | Review |
| TD Aeroplan Infinite Visa Card | Earns Aeroplan points†; great for frequent Air Canada and Star Alliance flyers | Best Offer yet for the TD® Aeroplan® Visa Infinite* Card: Earn up to $1,600 in value† including up to 70,000 Aeroplan points†. Conditions Apply. | $139 | Review |
| Tangerine Money-Back Credit Card | Up to 2% cash back on recurring bills | If you're approved, you’ll earn an extra 10% back on up to $1,000 in everyday purchases made within your first 2 months.* | $0 | Review |
| SimplyCash Preferred Card from American Express | Earn 4% cash back on eligible gas station purchases in Canada, 4% cash back on eligible grocery store purchases in Canada (up to $1,200 cash back annually) and 2% cash back on all other purchases. | In your first 10 months as a new SimplyCash® Preferred Card from American Express Cardmember, you can earn a $40 statement credit for each monthly billing period in which you spend $750 in purchases on your Card. This could add up to $400 in statement credits in the first 10 months. Conditions apply. | $9.99/month (Equals a total fee of $119.88 annually) | Review |
*†Terms and conditions apply / Terms and Conditions apply
Offer for TD® Aeroplan® Visa Infinite Card is not available for residents of Quebec. For Quebec residents, please click here.*
¹ Conditions Apply. Visit here for the Scotia Momentum® Visa Infinite Card to learn more.*
Should you pay your rent or mortgage with a credit card?
There’s a reason most landlords and lenders don’t accept credit card payments by default: Paying off large amounts of debt with more debt can be risky. That said, there are several scenarios where paying off your rent or mortgage with a credit card can make sense:
- The math checks out: Using your credit card can make sense if the points or cash back from your card keep more money in your pocket after factoring in fees charged by third-party intermediaries. You might elect to make rent or mortgage payments with the card just to max out your potential welcome offer, and then go back to making those rent or mortgage payments with cheques after the welcome period ends.
- You can pay off your card immediately: Ideally you should always pay off your credit card balance promptly with money from your bank account so as to avoid interest charges.
- You don’t have high-interest debt: This isn’t a requirement, but it’s best to avoid taking on additional credit card debt if you’re already dealing with other debt, like additional credit card balances or personal loans.
On the other hand, there are several scenarios where paying off your mortgage or monthly rent with a credit card is a bad financial choice:
- You’re late paying your bills: If you’re historically late on paying off monthly bills, taking on additional credit card debt is even riskier and can put you further into debt.
- You’re worried about your credit score: Having a high credit utilization rate can hurt your credit score. If you’re trying to improve your credit score, this strategy isn’t for you.
- Youhave a lackluster credit card: If you aren’t earning oodles of cash back or rewards points from your credit card, the fees from using a third-party payment service to pay your housing costs will do you more harm than good.
In a nutshell, with enough rewards and a lucrative sign-up bonus, paying housing expenses with a credit card can make sense in some scenarios. But if you’re resorting to credit card payments because you don’t have enough cash on hand, it might be time to reassess if you’re overpaying for rent, or to cut some of your expenses and gradually divert money toward building your homeowner emergency fund.
Related articles:
- What to do if you're having trouble paying your mortgage
- Can you pay income taxes with a credit card?
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