In Canada, rent is typically paid through traditional methods such as cash, cheque, Interac e-Transfer, or pre-authorized debit. However, many renters are exploring alternative payment options that offer more convenience and financial benefits. One such option gaining attention is paying rent with a credit card. While landlords rarely accept credit cards directly due to processing fees and risks, fintech innovations have made it possible for tenants to use credit cards indirectly to pay rent, unlocking rewards and credit-building opportunities.
Why Consider Paying Rent with a Credit Card?
Rent is often the largest monthly expense for Canadians, and using a credit card to pay rent can be a strategic financial move. Paying rent with a credit card allows renters to:
- Earn rewards such as cashback, travel points, or airline miles on a significant recurring expense.
- Build or improve their credit score when payments are reported to credit bureaus.
- Manage cash flow by leveraging the credit card’s grace period before payment is due.
These benefits can make paying rent with a credit card an appealing option, especially for those who already use credit cards for other purchases and want to maximize their rewards
Challenges with Direct Credit Card Payments to Landlords
Despite the potential benefits, most landlords in Canada do not accept credit card payments directly. The reasons include:
- High processing fees charged by credit card companies, which can reduce landlords’ net income.
- Payment processing delays and the risk of chargebacks, which can complicate rent collection.
- Preference for traditional payment methods that are straightforward and low-cost.
Because of these factors, renters cannot usually swipe their credit card directly to pay rent, prompting the need for third-party solutions
Third-Party Services Enabling Credit Card Rent Payments
To bridge this gap, fintech companies have developed platforms that allow renters to pay rent with a credit card indirectly. These services accept credit card payments from tenants and then forward the rent amount to landlords via accepted methods such as Interac e-Transfer, cheque, or direct deposit.
Popular platforms in Canada include Chexy, Plastiq, RentMoola, and Get Digs. Here is how these services generally work:
- The renter signs up and links their credit card to the platform.
- The renter inputs landlord and rent payment details.
- The platform charges the credit card and sends the rent payment to the landlord using a preferred traditional method.
- The renter earns credit card rewards on the transaction, minus a processing fee charged by the platform.
For example, Chexy charges a processing fee of around 1.75%, which is lower than many competitors, and offers additional perks like credit building by reporting timely rent payments to Equifax. Plastiq, another service, charges approximately 2.9% per transaction but provides flexibility and the ability to schedule recurring payments.
Weighing the Costs and Benefits
While paying rent with a credit card can unlock rewards and convenience, renters should carefully consider the associated costs:
- Processing fees reduce the net rewards earned and can add up over time.
- Interest charges may apply if the credit card balance is not paid in full monthly.
- Not all credit cards offer the same rewards or benefits on rent payments.
Renters should calculate whether the value of rewards and credit-building benefits outweigh the fees and potential interest costs. Tools like Chexy’s Rewards Calculator can help compare credit cards and estimate net gains from paying rent via credit card.
Expert Insight
Kevin, CEO of Finly Wealth, a financial services company focused on credit card optimization, notes:
“Using credit cards to pay rent can be a smart financial strategy if done thoughtfully. It transforms a necessary expense into an opportunity to earn rewards and build credit, but renters must be mindful of fees and ensure they pay off balances promptly to avoid interest.” His perspective underscores the importance of balancing convenience with financial discipline.
How to Get Started
For renters interested in paying rent with a credit card in Canada, the process typically involves:
- Researching and selecting a third-party payment platform that suits your needs.
- Signing up and verifying your identity and lease details.
- Linking your preferred credit card(s) to the platform.
- Setting up one-time or recurring rent payments.
Many platforms offer user-friendly interfaces and customer support to assist with setup. Some even waive processing fees for the first month or for new credit card applications, providing an incentive to try the service
Conclusion
Paying rent with a credit card in Canada is becoming increasingly accessible thanks to fintech innovations. While direct credit card payments to landlords remain uncommon, third-party services enable renters to enjoy the convenience and rewards that credit cards offer on one of their largest monthly expenses. Renters should carefully evaluate fees, rewards, and their ability to pay credit card balances on time to make the most of this option. As Kevin from Finly Wealth highlights, when managed wisely, this approach can turn rent payments into a valuable financial tool rather than just a cost.
By leveraging these new payment methods, Canadian renters can optimize their finances, earn rewards, and potentially improve their credit profiles, all while meeting their rental obligations smoothly and efficiently.
