The Big Picture On Accepting Rent by Credit Card:
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Accepting rent by credit card provides flexibility for renters who might be short on cash and can help them avoid late fees. For landlords, it offers faster and more reliable payments.
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Using credit card payments can automate recurring payments, direct deposits, and bookkeeping, making rent collection more efficient.
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There is a significant risk if renters misuse credit cards, potentially leading to financial irresponsibility and defaults on rent.
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There was a time when only established businesses could accept credit cards. Fortunately, those days are long gone.
Today, even individual landlords can accept rent by credit card. (Hint hint: landlords can accept rent by credit card and eCheck/ACH payments for free with SparkRental’s landlord software.) It’s fast, simple, and easy enough for the most technology-allergic renters to handle.
After all, who hasn’t paid for something online with a credit card? It’s a lot faster than writing – and mailing – a check!
But as Jeff Goldblum famously cautioned in Jurassic Park, just because you can do a thing, does that mean that you should?
Quick Overview: Cash Vs. Credit Card
Let’s take a quick look at the major differences between accepting rent using cash and credit cards.
| Aspect | Credit Card | Cash |
| Convenience | High: Tenants can pay remotely and automatically | Low: Requires in-person payment |
| Processing Time | Quick: Payments processed within days | Immediate: Cash is available instantly |
| Fees | High: Transaction fees apply | None: No processing fees |
| Security | High: Secure and traceable transactions | Low: Risk of theft and loss |
| Record Keeping | Easy: Automated digital records | Manual: Requires physical receipts |
| Risk | Chargebacks and potential for tenant debt | Loss, theft, and lack of paper trail |
Pros of Collecting Rent by Credit Card
For landlords curious about this relatively new rent collection option, keep the following advantages in mind for accepting rent via credit card.
1. Flexibility for Renters Short on Cash This Month
We’ve all had months where cash has been tight. It’s not a great feeling, but it’s certainly one we can all relate to.
And on those (hopefully rare) months, what’s our saving grace? Credit cards.
Accepting rent by credit card means tenants suddenly have no excuses left about being short that month. If they’ve maxed out even their cards and can’t pay rent, you know it’s time to serve an eviction notice and start the eviction process.
2. It’s Cheaper for the Renter than a Late Fee
Imagine it’s the fourth of the month, and rent is about to become late. As a renter, you can either take a 5-10% hit on the late rent fee… or suck up the 3.99% (or 4.5% or whatever the vendor charges) fee to pay their rent by credit card.
Nor is that fee all downside, either. The renter probably gets back 1.5-3% back in the form of reward points, so the effective cost may be only 1% of the rent.
What does this mean for the landlord? Not only is there no excuse for late rent, but it’s far cheaper for the tenant to pay their rent by credit card than suffer a late fee.
3. Free for the Landlord & Free Alternative for the Renter
It’s all upside for the landlord. Completely free.
In both our rent payment platform and several of our competitors’, tenants have another option to pay their rent electronically. A free option.
That free alternative? Sending the rent via ACH.
For anyone not in banking, ACH stands for “automated clearing house” (an opaque a banking term as they come), but it simply means an electronic transfer from one bank account to another.
So, the tenant can send cash electronically, for free, rather than whipping out their plastic.
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4. It’s Faster for Everyone than Checks
Digging out a checkbook and writing a physical check, sealing and addressing an envelope, then finding a mailbox to drop it into?
It’s vintage 20th Century. Outdated. Labor-intensive.
Then everyone waits while it travels physically in the mail. And assuming it doesn’t get lost in route. Not to mention, providing the tenant the age-old excuse: “Um, yeah, the check’s in the mail!”
The landlord has to check their mailbox, then deposit it into their bank account. And pray it clears.
This point is already starting to get belabored, but you get the idea: paying rent by credit card is faster for everyone.
5. Direct Deposit into the Landlord’s Account
All right, so this is related to Advantage 4 above.
Still, it’s worth mentioning: as a landlord, you don’t have to actually do anything. You get an email notification that the rent was deposited in your account.
Done. Finished. Kaput.
6. Rent Reported to Credit Bureaus
The best online rent payment platforms (cough: SparkRental) report rent payments to at least one credit bureau.
It creates both a carrot and a stick, to incentivize on-time rent payments. If the renter pays on time, it builds and improves their credit. If they pay late, it hurts their credit, making it harder for them to get approved for future homes or mortgages.
And especially in the wake of an 18-month eviction moratorium, reporting unpaid rents to the credit bureaus offers one of the few real consequences for wayward tenants.
Reward your good tenants, while simultaneously adding accountability for your bad ones.
7. Automated Recurring Rent Payments
On SparkRental’s rent payment platform, and on some of our competitors’, tenants can set up automated recurring rent payments. They can set these up for either ACH or credit card payments, as they prefer.
Automated payments can also serve as a draw for tech-savvy tenants, or younger generations. Your renters don’t even have to think about it, the rent just goes out each month, in full and on time. You get paid, they avoid late fees. Easy peasy.
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8. Automated Accounting & Bookkeeping
Again, the better online rent collection platforms automate your accounting for you. At least when it comes to inbound payments.
Our landlord software automatically adds and categorizes all payments received through our platform for you. You can manually add other forms of income, and all your expenses, for simple income and expense reporting.
We currently offer one-click exports to Excel spreadsheets, and will soon offer one-click exports to Quickbooks and Schedule E tax statements.
The Risk of Accepting Rent by Credit Card
For all its upsides, collecting rent by credit card comes with one giant risk.
Paying for bills on credit can open the door for irresponsible spending. And that risk accelerates when you talk about letting people pay their largest bill on credit.
If a person can put literally every expense in their life on their credit card, but doesn’t have the fiscal responsibility to pay that balance down… well, we all know how that can end. Their credit card balance spirals out of control, and they still end up defaulting on their rent.
What a shocker: not everyone is particularly responsible with their money.
Aside from that, here are other potential issues with accepting
| Disadvantage | Description |
| Transaction Fees | Credit card companies charge processing fees, which can reduce the overall rental income. |
| Delayed Payments | Funds may take a few days to process, impacting cash flow compared to direct bank transfers. |
| Risk of Chargebacks | Tenants might dispute payments, leading to potential financial and legal complications. |
| Encourages Debt | Tenants may accumulate debt by using credit cards, increasing the risk of late or missed payments. |
| Setup Complexity | Implementing a credit card payment system involves setting up merchant accounts and managing payments. |
| Security Concerns | Handling credit card information requires compliance with security standards to prevent fraud. |
So… Should I Accept Rent by Credit Card?
In the 21st Century, I’m a huge believer in streamlining and automating every process possible in property management. Nowhere is that truer than with rent collection.
Checks are slow and may bounce. Cash requires receipts and creates a higher audit risk.
And honestly, if a renter is so irresponsible with money that they can’t handle paying by ACH or credit card, it probably appears on their credit report. You can simply avoid those rotten apples through tenant screening.
Whether you use our online rent collection service or another service on the market, I do truly believe that electronic rent collection is a no-brainer for landlords. I collect rent electronically with my own properties, and there’s nothing better than an email popping into your inbox saying “John Doe Renter sent you $1,000 in rent, it’s deposited in your account.”
Being a landlord comes with enough hassles; automating your rent collection is a simple way to reduce work and boost the chance of actually seeing the rent!♦
Do you accept rent electronically? Why or why not? What would make an electronic rent collection system perfect for you?
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Interesting idea. I’ve never tried online rent collection, always accepted checks. But you’re never too old to try something new, and it would definitely save me some headaches if the money just arrived in my account on the first of the month. Might give this a whirl with one tenant and see how it goes.
The day that you ARE too old to try something new is the day you start dying, in my humble opinion. Not that I’m trying to lecture, mind you! Anyway please let us know if you bump into any questions, and keep us posted!
So what service do you use?
I’ve been toying with this idea for a couple years now. Going to try it I think… why not, right?
Why not indeed? 🙂
Landlords don’t usually accept credit cards for rent because it isn’t in their best financial or liability-related interests to do so.
But credit cards are still an excellent way to make payments.
Why do you say it’s not in landlords’ best interest to accept rent paid by credit card, as long as the credit card fee is paid by the renter?
Does it send warning bells when a tenant who usually pays by some other method, all-of-a-sudden makes the rent payment by credit card? Do you track how many payments are made by credit card?
Hey Dianna,
I can’t speak to other platforms, but on our platform, the tenant can send money via bank transfer (ACH) for free, or pay a 2.99% fee to pay by credit card. (Or the rent can be deducted from their paycheck, but that’s a different service.)
What about clawbacks? Isn’t it much easier for a tenant to dispute a credit card charge after having paid their rent? Doesn’t that disputed payment get clawed back during the investigation leaving the landlord to foot the bill?
How can a landlord protect against that situation when a tenant uses a credit card?
It’s theoretically possible, although I’ve never seen it happen. And tenants can write bad checks, or try to have checks reversed even after they’re cashed. If a tenant tries to reverse a rent payment, no matter how it’s delivered, then it’s clearly time to file for eviction!
In my opinion… yes! It is convenient for both parties!
Agreed J.!
I am accepting Credit Cards, I preferred the cashless transactions.
Agreed Cassandra!
Yes, I accept credit cards and other online transactions. It’s secured, fast, and convenient.
Agreed Lisa!