I already own more than a few credit cards. So, I’m not sure this new offering would tempt me… But, it might just work for a few folks.
What is it? It’s a credit card we can use to pay our rent. Yeah, I know that some landlords already let folks pay their rent with credit cards. But, they also assess a 3% fee for the privilege of doing so. So, that would mean your $ 2000 rent payment really costs you $ 2060. And, those 2000 or 4000 points you wanted to accumulate just cost you more than the points are worth. (Most points are valued at $ 1 per hundred.)
But, this card- from Bilt Technologies Inc. (in cahoots with Mastercard and Evolve Bank & Trust)- will be a little different. For starters, it’s arranged to help you build up a credit history for paying your rent. Secondly, Bilt will offer rewards points on the rent (just like our other credit cards). But, the kicker is that the landlord won’t be charging 3% fees for using the card. (If the landlord doesn’t accept credit cards without point, Bilt mails paper checks out on behalf of the cardholder.) So, the points are “free”. (This service works because the card earns fees on one’s other spending on the card. To ensure it earns those fees, one is awarded more points for rent payments if the card is used for many other activities.)
The reward points will apply to rent, other purchases- even a house down payment!
Rewards points can then be put toward rent and other purchases, even toward a down payment on a house.
The official goal is to help renters get some sort of long-term benefit. (Homeowners accumulate equity as they make each mortgage payment.) The card seems aimed at Millennials. Except… if one paid rent for 10 years, the accumulated points for a down payment on a house won’t even total $ 8000. And, that doesn’t include the fact that using credit to pay rent will mean there will be fees of at least 15% on the balance- which can also be as high as 22.5%. Pretty steep fees for the privilege of paying rent with a credit card.
(It also seems that renters- if they don’t pay off the rental payment in full before the next one comes due- will also need sufficient cash stashed in a linked bank account to ensure the rent is secure. That makes this card – at least to me and others who do financial management- much less interesting.)
So many people get caught in the CC cycle! If they don’t pay balance each month many will be in a vicious cycle of never being free of debt. CC’s weren’t even a “thing” back in my early years and I’ve never let a monthly bill go without paying in full. I’m so glad our granddaughter followed our lead and never makes a purchase unless she has the cash to pay.
Martha recently posted..Sauteed Cauliflower
Great advice, Martha!
True, but for a kid with no credit history and a stable rent payment history, would this not be a decent way to simply build credit? Am I missing something? Assuming rent is always paid on time either way…?
Holly recently posted..An Engraved Invitation to Follow.it and Follow Me
Using a credit card builds credit history. Yes, this would have higher balances (one presumes)- so it may help. But, to use it for building up money for a downpayment? That ain’t never gonna happen, Holly.
I think I agree with you! The whole time I was reading this post, for some reason, I was reading “credit card,” but thinking “debit.” And that seemed like it might be a good idea. But when it dawned on me that it’s actually a credit card, so you’re borrowing the money to pay your rent – no! Not a good idea. And then it rewards you for borrowing money for other things? No. Not a good idea.
I never borrow against my credit card, Jeanine- sure, it’s credit, but I pay it off each month. This card still doesn’t meet expectations (mine) even if I were to pay it off each month. But, if one borrowed- then, it’s a real disaster.
Our world has changed so much, and I can feel that just by reading this post. I was raised by a mother who took all of my father’s cash earnings and put them into budget envelopes. Imagine having to borrow money to pay the rent – and so many people are in that situation.
Alana recently posted..The Grace of Daylilies #WordlessWednesday
Especially since the pandemic started, Alana. (And then to watch municipalities across the USA fail to deliver the rent relief for the tenants AND the landlords for months.)