Here’s Why You Should Avoid Paying Rent with Your Credit Card
Rent payment is a fixed expense in your monthly budget and one that must be done on priority. You may defer other unnecessary or avoidable spends but paying rent cannot be skipped. If you are facing an insufficiency of funds, then rent payment can become challenging. One of the most popular trends these days for paying the monthly house rent has been through credit cards. Though it seems like a desirable option from the outset, it could have an adverse impact on your financial status. To understand more, let’s get into the details.
Paying Rent vs. Other Spends on Credit Cards
There are many individuals using credit cards for bill payments such as electricity, broadband, water charges, and so on. Thus, paying rent may also seem like a very convenient option for such users. However, you need to understand the difference between the two spends. Usually, the utility bills that you pay with your credit card amount to much less when compared to the huge sum of house rent.
Thus, before using a credit card for rent payment, you must ensure that you have adequate funds to clear your card dues the next month. Otherwise, in case of lack of funds, you’ll have to bear high-interest charges that could be devastating to your credit score.
The only exception to this rule is if you have a steady source of income, then paying your rent through your credit card may not be such a bad idea. Firstly, you can save cash by paying rent via credit card for at least 45 days. Secondly, you can earn reward points on your card spends which can be gratifying. Thirdly, if pay your credit card bills on time, you invariably improve your credit score.
It’s not surprising for many individuals to face a financial crunch in the current COVID-19 situation. Payment of rent through a credit card must be your last resort. During a short-term financial crunch, using your credit card can only provide temporary relief. And if you miss the regular payment on your card bill, you would get into further debt burdening your financial obligations and disturbing your peace.