Opinion Credit & rewards · rewards
Stop chasing points on your rent
Paying rent by credit card sounds like free rewards on your biggest bill, but once you add the fee, the risk and the effort, most renters come out behind.
Credit & rewards I write about rewards for a living. I enjoy a good points redemption more than is probably healthy. So believe me when I say this: for most renters, putting rent on a credit card to earn points is a bad deal, and the enthusiasm for it online tends to leave out the parts that matter.
The logic sounds airtight. Rent is your biggest bill. Rewards cards pay you a percentage of what you spend. Therefore, charging rent to a card means rewards on your biggest bill. The problem is everything that sits between the first sentence and the last.
The fee usually wins
Most landlords in Canada do not accept credit cards for rent, because card payments cost them money. That gap has been filled by third-party payment services that charge your card and then pay your landlord by other means. These services generally charge a fee, typically a percentage of the payment, and the exact amount varies by service and changes over time.
Here is an illustrative example. Say your rent is $2,000 a month and the service charges a 2.5 per cent fee. That is $50 a month, or $600 a year. Say your card earns 1.5 per cent back. That is $30 a month in rewards. You are paying $50 to earn $30, and losing $240 a year for the privilege.
The more generous your card, the closer this gets. But for the maths to work, your rewards on rent need to be worth more than the fee, and most cards do not earn that much on general spending. Some cards also treat payments through these services differently from regular purchases, or exclude them from bonus categories entirely. Check your card’s terms before assuming you will earn anything.
If you are paying a fee to earn a reward, the reward is just your own money coming back with a haircut.
The risk is real
Putting your rent on a card means a large balance lands on your statement every month. If you pay it in full, fine. If you ever cannot, you are now carrying a balance on a card whose purchase interest rate is often around 20 per cent a year or more. One month of carrying a rent-sized balance can cost more in interest than a year of rewards.
There is a credit score risk too. Your credit utilization, meaning how much of your available credit you are using, is one of the things that can affect your score. As an illustrative example, a $2,000 rent charge on a card with a $5,000 limit means 40 per cent utilization before you have bought a single grocery, and the balance reported to the bureaus may be the one on your statement, not the one after you pay it off.
And there is the operational risk. A third-party payment that is late, delayed or rejected is still your problem as far as your lease is concerned. If your landlord receives rent late because a payment service had a processing delay, the tenancy consequences fall on you, not the service.
Late rent is a tenancy issue
Repeatedly paying rent late can, in some provinces, become grounds for a landlord to try to end a tenancy. If you use any payment method that adds steps between you and your landlord, build in extra time and keep proof of when you paid.
The one exception people make
The argument I hear most often in favour is welcome bonuses. Many rewards cards offer a large bonus if you spend a certain amount in the first few months. If your normal spending will not reach that threshold, putting one or two months of rent on the card through a payment service might get you there, and the bonus can be worth far more than the fee.
I will grant that this can work, occasionally, for disciplined people. But be honest with yourself about three things. First, do the actual maths with the actual fee. Second, make sure you can pay the full statement balance the moment it arrives. Third, ask whether you are applying for cards mainly to chase bonuses, because frequent new applications can affect your credit file, and an annual fee in year two can quietly cancel out the bonus from year one.
What I would do instead
Pay rent the cheapest, most reliable way your landlord accepts. For most people, that is an e-transfer, a pre-authorised debit or a cheque. Then put your everyday spending, such as groceries, transit, phone and internet, on a no-fee or low-fee rewards card that earns well in those categories, and pay it off in full every month.
That will not make for an exciting social media post. But it earns rewards without paying for them, it keeps your rent payments simple, and it leaves your credit utilization low. Over a year, that quietly beats most rent-on-a-card strategies.
I love rewards. I just love them more when I am not paying for them. Your rent is the one bill where simple and boring is a feature, not a bug.
End of the story · 4 min
WAbout the writer
Rosalie Fontaine
Rewards and points writer, rewards
Rosalie has kept a spreadsheet of every rewards card she has held for ten years, including the ones that were not worth the annual fee. She writes about rewards for people who would rather do the maths once than chase points forever.
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