More Americans are using credit cards to pay their rent — here's why that can pose risks

"People have way more power over their credit card issuer than they realize."


As many as one in five renters says they've fallen behind with rent payments during the pandemic, according to the Center on Budget and Policy Priorities. A new Urban Institute report estimates that collectively, consumers owe anywhere from $8.4 billion to $52.6 billion in back rent.

Some Americans have been forced to dig into their savings to pay for housing, and when they couldn't, they turned to credit cards. Instances of people paying rent with a credit card were up as much as 70% in 2020 compared to the previous year, according to a Federal Reserve Bank of Philadelphia analysis.

"Life is really expensive in 2021. [A lot] of people don't have the luxury of putting any money away, and that's why they're having to lean on those credit cards," says Matt Schulz, chief credit analyst at LendingTree.

Leaning on credit cards is causing Americans to accumulate more debt, says Chris Salviati, housing economist at Apartment List. "We did our own survey asking renters about the financial sacrifices they've made since the start of the pandemic, and we found that more than a third of renters have withdrawn from their personal savings accounts, nearly a third have borrowed money from friends or family, and 23% have accumulated credit card debt."

Paying rent with a credit card: What you need to know

Video by Mariam Abdallah

Here's what to know if you've had to turn to your credit cards for rent payments.

Charging your rent can affect your credit score

Maintaining a good credit score can help you save thousands of dollars on auto loansprivate student loansmortgages, and credit card interest rates. Charging rent on a credit card, though, has the potential to hurt your score.

The reason: Charging a big expense like rent can jack up your balance quickly and take up your available credit — and using too much of your available credit can hurt your score.

Your credit utilization rate, which is the amount of credit you're currently using divided by the total amount of credit you have available, is the second biggest factor when calculating your credit score. It accounts for nearly a third, or 30%, of your score, based on FICO's model

If you're struggling financially, you might also have a more difficult time making monthly payments. That, compounded with carrying a high balance, can be difficult to manage. Any late payments could also hurt your score.

Steps you can take to manage rent payments

If you need to temporarily charge your rent to a credit card, it never hurts to reach out to your bank for help. "People have way more power over their credit card issuer than they realize," says Schulz. One way to test that power is to ask for a lower interest rate.

"The numbers over the years have shown consistently that people frequently get their way when they ask for a lower interest rate, and they do so to a degree that would really surprise people," Schulz says. "The worst thing that can happen is that they tell you no, but if they say yes, then some amazing things can really happen, and that's certainly the case with your money."

Life is really expensive in 2021. [A lot] of people don't have the luxury of putting any money away, and that's why they're having to lean on those credit cards,
Matt Schulz
chief credit analyst, LendingTree

Being transparent with your landlord can also be helpful: "If you're in a tough spot, it's definitely best to not have it come as a surprise to them when you miss your rent, and you may be able to work out some form of agreement," says Salviati.

That might come as a reduction in the rent, or a payment plan. When reaching out to your landlord, make sure to be honest and specific about your financial situation. For example, noting that you recently lost your job or racked up high medical bills.

"A lot of folks don't realize that they can negotiate and that landlords are people too," Eva Rosen, a professor at Georgetown University who specializes in poverty and American public housing, told Grow.

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