These days, it seems like you can charge anything on a credit card: bus passes, school tuition, even a pack of gum. One thing that does get people pulling out their checkbook month after month is rent. Even this is slowly starting to change. Across the country, more and more apartment complexes are accepting credit cards for rental payments. We spoke to building managers and landlords across the country to see whether they allow tenants to pay rent on a credit card.
Apartment size seems to have a lot to do with whether they accept a building accepts credit card payments. Approximately a third of the large apartments we contacted offer this service. In most cases, tenants make payments online at a site specific to their complex or the management company that owns the building. Properties that offer this service include the River Ridge at Keystone apartments in Indianapolis, Ocean at One West Street in New York City and the Avalon at Foxchase in San Jose, California.
None of the small landlords we spoke to offered this service. Most agreed that with so few tenants, it just wasn’t worth the time or the effort to set up a credit card processing system. One landlord told us that he had “no idea how to even go about starting something like that.” He noted that unless his tenants expressed a strong interest in the service, he wouldn’t bother looking into it. Others worried that credit card processing fees were too high to make the service worthwhile.
Credit Card Processing Fees–Who Pays?
As with all credit card transactions, companies like Visa, American Express and MasterCard charge processing fees of 2% to 5% to the seller. Even credit card processing services like PayPal charge a combination of flat and percentage fees. These fees can really add up for buildings that have hundreds of thousands of dollars coming in each month. Rather than pay these fees themselves, buildings often use processing services that pass them on to the tenants. When this happens, using a credit card becomes more expensive than writing a check. Perhaps this is why most building managers we spoke with said that most of their tenants prefer to pay their rent the traditional way. Other complexes, such as the Chestnut Hill apartments in Columbus, absorb the cost of the processing fees. They present fee-free credit card processing as an amenity for tenants.
Given that processing fees can be passed directly to the tenants, why don’t all large complexes accept credit cards? Accepting credit cards allows landlords to gather data about payment history, reduce time spent processing checks and increase timely payments by offering direct deposit. Receptionists at the rental offices of 2 Gold Street in New York City, the British Woods apartments in Nashville and the Promenade Memorial in Houston said that although the management had discussed the possibility of accepting credit cards, they had chosen not to offer the service. Reasons given included a lack of interest from tenants and decisions to focus on more pressing issues. Each of these complex representatives noted that the credit card issue would likely be reconsidered in the future if enough tenants asked about it. Small landlords also said that they’d reconsider the issue if tenants expressed strong interest.
Why Pay Rent with a Credit Card?
What advantages do credit card payments offer to renters? In buildings that offer an automatic payment feature, tenants don’t have to worry about making a late payment. For those with hectic work and travel schedules, automatic billing just makes life simpler. Other tenants use credit cards to rack up points on cards that offer reward or frequent flyer programs. For most renters however, using a credit card to pay rent is a way to make it through a rough financial patch.
If you are already in credit card debt, this can be a dangerous solution. It may also be a sign that you are living in an apartment that is beyond your means. Remember that interest will accrue on any unpaid balance that remains on your card. If putting rent on your card makes it hard to make minimum payments every month, your credit rating will take a hit. For those with a less than stellar credit history, paying rent on a card may not be worth the risk. But for renters who can stay on top of their bills, the added convenience of credit card payments can be a real luxury. If your apartment does not yet offer credit card processing, speak to your landlord or management company. According to the landlords we spoke with, tenant interest is the most important factor in determining whether to accept credit card payments.