Who Gets a Charge Out of Paying Rent With a Credit Card?
The enticement made WalletPop consider the practice of paying rent with plastic. Should you or shouldn't you? Related, a developer of posh residential buildings, pioneered the arrangement back in 2003 with AmEx, according to the New York Times. Other rental outfits followed.The advantages for landlords and tenants are obvious: Landlords are guaranteed payment on the first of the month. Tenants can accrue gift or travel points on their credit card while no longer having to remember to write a check.
Rob Siegel told WalletPop it was "no-brainer." Siegel, who works for an online travel company, used American Express Platinum travel miles accrued from his rental arrangement at Related's Tate building in Manhattan to upgrade two seats to first class for his honeymoon flight to Hawaii last October. He pays about $6,000 a month in rent, so he estimated he'll be collecting another 70,000 points or so for another trip somewhere.
"When you're paying the amount my wife and I pay, it's nice to get rewards for paying your rent," Siegel, 40, said. "You can do a lot of things with those miles. I would recommend it to everybody."
The delayed arrival of your statement can also act as a temporary loan, helping you bridge a temporary shortfall of cash in an emergency, Nessa Feddis, vice president of the American Bankers Assocation told the New York Times. Just keep in mind you have to pay in full at some point.
But you might not want to throw away your checkbook just yet when the rent comes due.
"If you're a financially responsible person and you know there's no risk of your not making the full payment, go ahead," Mitch Slater, senior vice president and financial adviser at UBS Financial Services in Westfield, N.J., told WalletPop. "But most people are not that financially diligent."
Unpaid interest can build. Credit history can crumble. Slater also argued that rewards can "easily go away." "Airlines can merge, banks can go under, so there's no guarantee you'll reap the rewards," he said.
For those wishing to pay automatically, Slater preferred a timed withdrawal from a bank account. It has an easily identifiable limit to prevent renters from going overboard. "Things happen out of the blue," Slater said. "You're taking on more risk. Is the reward worth the risk?"
For the well-heeled who live in Related properties, the answer has been a resounding yes, according to the company. About 80% pay by credit card or through an auto-debit arrangement, the company said. Rents begin at $2,895 for a studio at MiMA, for example, so it stands to reason prospective candidates are vetted carefully for financial stability.
"We assume that most individuals are responsible credit card users and we don't expect people will get into trouble," Daria Salusbury, senior vice president of Related Rentals, told WalletPop. "People have to pay rent anyway."
Salusbury said Related began the service to "go with the times" and give customers a special incentive. "We do get our rent the first of each month but we were getting that anyway," she said.