Credit cards and banks are starting to let people charge their rent or mortgage on your credit card. Great for earning rewards points or frequent flyer miles, but it's only a good idea if you can pay off your credit card in full every month. [NYT]
Post a comment
Comments:
I'd love it. Any idea which cards are allowing this?
I called my mortgage company a couple of years ago and asked about paying by cc. The CSR gasped in horror. The marketplace speaks!
Several of my services allow this, including my mortgage company. I pay some of them with a cash-back card, but the rest have a "convenience fee" that would more than offset the benefits of using my card, so they get payments from the bill-pay service at my bank. Just as convenient but doesn't cost me a "convenience" fee and they don't have the information they'd need to randomly take out MORE money in the middle of the month, nor are they able to take whatever amount they want in the event of a dispute.
One of my friends did this every month. She shares an apartment with 3 other roommates, so the person with the rewards card would collect everyone's rent checks, pay rent with the card, then immediately cash the checks and pay off the card.
The cc was an Amazon card, and they scored something like a $25 Amazon gift card every month this way. They're probably still at it. Nice for an apartment full of students.
My aunt and uncle have been doing this for years with their AMEX (gold, I think). They charge the mortgage to the card, get the points, then pay the bill that month. They rack up so many points a year they go on exotic vacation for pennies on the dollar.
What I'd give to be able to pay my rent with my Amex, but the management only takes checks.
The frequent-flyer miles...my God...the miles.
I'd love to do this! I charge a ton, but pay it off every month. It's like getting a 1% discount (cash back) on your mortgage! Totally a great deal.
Certain schools (I believe Stanford is one of them) also allow you to pay the tuition with your credit card. Imagine the rewards for a $50k tuition fee. :)
@krunk4ever: My parents paid my tuition on a credit card for a few semesters, but there was a 2-5% 'credit card charge' each time so they stopped.
HeyThereKiller: Credit card companies get a piece of every transaction you make with their card (usually 2-5%). Every time you shop at Sears, or eat at McDonald's, credit cards want their cut. That's why Visa shows commercials advocating you use your card, for all of your everyday purchases."
...
I'm all for getting my 1% cash back on major monthly bills like my rent, but even if you're responsible with it, realize that this has two consequences:
1. Credit card companies will get an extreme boost in transaction fee revenue.
and
2. Your landlord will eventually pass that 2-5% transaction fee on to you.
Is it only a good idea if you can pay it off IN FULL or if you can pay the amount equal or greater than your mortgage payment?