Contents of This Article:
- Can You Pay Rent With a Credit Card?
- Common Payment Methods for Tenants and Landlords
- Pros and Cons of Allowing Credit Card Payments
- Pros and Cons of Paying Rent With a Credit Card
- Collect Timely Payments With Professional Management
Can You Pay Rent With a Credit Card?
Yes, paying rent with a credit card is possible, although it depends on the landlord or Baltimore property management company’s payment systems. Some landlords will allow tenants to pay rent with a credit card through an online payment system, while others may require that rent be dropped off in person.
That said, paying your rent with a credit card is different than paying it with a debit card–since it’s not actually your money that you’re paying with. As such, it can be problematic for both tenants and landlords. Next, we’ll go over whether or not landlords should allow tenants to pay rent with a credit card and how it may affect each party.
Common Payment Methods for Tenants and Landlords
There are plenty of ways to accept rent, and whatever methods you choose to use are up to you as the landlord. You may choose to accept cash, a certified check or cashier’s check, a money order, or you may allow online payments.
That said, some payment methods are better than others. You can always go the traditional route and collect checks or cash from tenants. However, it makes an extra trip to the office for your tenants, and you risk losing or misplacing the physical payment. Additionally, keeping track of cash or money order payments is more difficult unless you write up an invoice for each payment.
Online rent payments are most convenient for landlords and tenants. However, avoiding peer-to-peer payment systems like PayPal or Venmo is best. These transactions can be less secure and may come with transfer fees. On the other hand, online payment systems like direct deposit, rent collection apps, or credit card payments are all more secure and beneficial for both landlords and tenants.
Ultimately, paying rent with a credit card has pros and cons for both landlords and tenants. Keep reading as we review some of those next.
Pros and Cons of Allowing Credit Card Payments
If you’re considering allowing tenants to pay rent with a credit card, knowing the pros and cons is crucial. While it can be convenient for you and your tenants, it may pose some issues regarding fees or payment delays. Here’s what to keep in mind while making a decision.
- Fewer Late Payments- Allowing tenants to pay rent with a credit card makes the process much more convenient for renters. This is especially helpful if they don’t have the funds available to make a payment on time, reducing late or missed payments.
- Competitive Advantage- Accepting credit card payments may attract more tenants, especially those who prefer to use credit cards for their monthly expenses or who value the flexibility of different payment options.
- Streamlined Payment Process- Allowing tenants to pay rent with a credit card streamlines the rent collection process–especially if you use online payment platforms that automate payment tracking and reconciliation.
Disadvantages of Credit Card Payments
- Transaction Fees- If you don’t pass on the transaction fees to your tenants, they can eat into your profits when they use a credit card to pay rent. These fees vary but typically range from 2% to 3% of the transaction amount.
- Cash Flow Delays- Depending on the credit card processing timeline, you may experience delays in receiving rent payments. This is one of the main disadvantages of accepting credit card payments compared to traditional payments like checks or direct deposit.
- Compliance and Security- If you plan on accepting credit card payments, you must comply with Payment Card Industry Data Security Standards (PCI DSS) to protect tenants’ payment information. That said, you may need to apply for a merchant account, which can cause additional administrative work and costs.
Pros and Cons of Paying Rent With a Credit Card
If you’re a tenant and want to pay rent with a credit card, it’s important to know that there are pros and cons to consider. While it may be more convenient, it could end up costing you in the long run. Here are some of the main points to consider.
Perks of Paying With a Credit Card
- Helps Build Credit- Consistently paying your rent on time using a credit card can help you build or improve your credit score. However, that’s only if you pay off your balance each month.
- Easy to Split Payments- If you’re splitting rent with a roommate, many online rent payment platforms allow you to split the payment between two or more people. Using a credit card makes it easier to take advantage of these online payment perks.
- Convenience- Using a credit card to pay rent can be convenient, especially if you prefer online payments or want to automate your monthly rent payment.
- Rewards- Many credit cards offer rewards programs, like cash back, points, or travel miles, just for using them. As such, paying rent with a credit card can help you earn rewards on a significant expense.
- Interest Charges- If you carry a balance on your credit card, you’ll incur interest charges. This can make it more expensive to pay rent with a credit card as opposed to using direct deposit from your bank account.
- Fees- Some landlords or third-party management services charge convenience fees for paying rent with a credit card. Unfortunately, these fees can offset any potential rewards, making it less cost-effective.
- Credit Utilization- Using a large portion of your available credit to pay rent may increase your credit utilization ratio. This may temporarily lower your credit score, especially if you’re close to hitting your credit limit.
- Risk of Debt- Paying rent with a credit card may tempt you to overspend or rely too heavily on your credit card. This may lead to debt if you cannot pay off the balance in full each month.
Collect Timely Payments With Professional Management
Whether you choose to allow tenants to pay rent with a credit card or want them to pay rent in person, there’s no right or wrong answer. However, allowing them to pay online with a credit card can be beneficial for you and them. You can lower the risk of a missed payment while they can pay on time and potentially build their credit–it’s a win-win situation.
Either way, landlords, tenants, and property managers must be on the same page regarding rent collection. And, if you’re looking to streamline that process, you may want to hire a professional property management company to help collect on-time payments.
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Bay Property Management Group can help with every step of the rental process, including rental marketing, tenant screening, rent collection, and more. Contact us today to learn more about our services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.