We humans are suckers for free stuff. And it can cloud our ability to judge the true value of a deal. 

That’s why credit card rewards can be so alluring — free concerts, flights and airport lounge access? Yes, please. Spending more earns you more, and housing is most Americans’ biggest monthly expense, so it’s understandable that the country’s 42 million rental households might be tempted to plunk their credit card on the first of the month.

Just 4.5% of rent payments were made on credit cards in 2023, according to the Federal Reserve Bank of Atlanta, but the market sees opportunity here. About one in four apartments have integrated credit card-style rewards into their payment systems, and there are new specialty credit cards designed for rent and mortgage payments.

All this might make it tempting to charge rent, but the risks are less obvious. Before you pay rent with plastic, consider the following.

Convenience fees add up fast

Do you want to pay 3% more for your rent? If you pay with a credit card, many landlords are likely to tack on fees. 

With the national median rent at $1,689 per month in February, according to real estate brokerage Redfin, the costs for the typical renter paying via swipe would be not insignificant: about $50 extra each month, or $600 for the year. 

Most businesses that accept credit cards have already embedded the “swipe fees” into the prices they charge to customers, but landlords largely haven’t done the same yet.

“It is rarely worth it to pay a convenience fee,” said Emily Thompson, an editor at the credit card rewards travel site The Points Guy. Transaction and processing fees almost always cost consumers more than the value of rewards they receive in return, she said. 

The Bilt Mastercard allows renters to earn rewards without paying fees. For now, Bilt covers the cost of sending rent to the landlord, in the hopes that cardholders will swipe for other expenses as well. That’s what got Ken Tse, a budget analyst and lifelong renter in San Francisco, to sign up for a Bilt credit card.

“Instead of paying rent to my landlord, I just pay it to my credit card company, and I set up an automatic payment,” Tse said.  

Rewards are tricky to value 

Credit cards rewards programs can be hard to understand You might have accrued thousands of points, but the cash value of a single point is typically just a penny or two. Points’ values can fluctuate depending on how you redeem them, and the terms set by your credit card issuer and its partnered airlines or hotel chains. 

Then there are annual fees that many credit cards charge in exchange for high value rewards. The American Express Platinum Card charges a $695 annual fee, for example, and offers up to $1,500 of potential benefits. Earning them all might push the cardholder to spend in ways that may not align with their lifestyle or budget.

Thompson told us she’s met people who opt for high-fee cards because of their airport lounge access, with unlimited free food and drinks. They don’t always realize you have to travel frequently and fly to airports with the proper lounges for that benefit to pay off.

“Are you spending $700 in airport alcohol out of pocket? Because if not, this is not a good value,” Thompson said. “Just buy your own airport drinks. You’re gonna save $600 a year.” 

Put another way: “if you weren’t going to spend money on the benefit [with cash], you’re not saving any money by getting it on your credit card,” Thompson added.

Tse said he earns about $7.34 in rewards every month by charging his rent to a Bilt credit card. While Bilt doesn’t currently charge an annual fee, it surveyed customers earlier this year, hinting that it may add new tiers charging $95 or $550 per year. Tse said he’d stop using the card before paying an annual fee that high, because the approximate $88 in rewards he could earn in a year wouldn’t offset the fee. He’d essentially be paying Bilt to use their product, he said.

Rewards can change, usually for the worse

Just as inflation eats away at our spending power, credit card rewards tend to become less robust over time. 

“Very few things in life get cheaper and more valuable as time goes on, and credit cards and points and miles are no exception,” Thompson said.  

At the beginning of the year, Thompson said she saw some credit cards raise fees without adding rewards or benefits. Other cards kept fees static, but cut their costs by dropping benefits like airport lounge access or statement credits for certain subscriptions.  

When the Bilt credit card first launched, for example, users received two points for every dollar spent on rent; now it’s just one. 

Carrying a balance negates any rewards

Banks issuing credit cards expect consumers to rack up balances that they don’t pay off at the end of the month, so they can charge them interest, and they use credit card rewards to encourage spending on their cards over their competitors. Researchers found that interest on balances generated more revenue for banks than swipe fees. 

When Wells Fargo partnered with Bilt to co-launch the Bilt credit card, the bank expected that card holders would carry balances for 50% to 75% of what they spent, The Wall Street Journal reported.  

“The biggest mistake that I see is people using a credit card for the rewards and then carrying a balance and paying interest on their purchases,” Thompson said.

That math will never make good economic sense, she said. 

The average credit card interest rate was 22.80%, according to Federal Reserve data from November 2024. Meanwhile, typical rewards are worth between 1% to 5% of the spending required to earn them. 

“Everything that we have, as far as earning rewards and maximizing your rewards, only exists as a value proposition if you’re paying off your bills in full every month,” Thompson said.

Nearly half of all American credit cardholders carry debt month to month, according to Bankrate, but two thirds of them are still trying to maximize credit card rewards. 

“If you can’t make [rent] this month, like, what’s the chance you’re not going to make it next month? And then you’re going to pay interest on that?” said Lulu Wang, an assistant professor of finance at the Kellogg School of Management. 

 “People are always overly optimistic about their ability to pay off debt.” 

Two instances when paying with a credit card might make sense

When budgets are tight, Wang said paying a credit card fee might be preferable to sending a landlord a late payment. 

“You can imagine not being able to pay your rent is a bad signal,” said Wang. 

“So maybe you just float it on your credit card until a week later, when you get your paycheck, and then you pay it off. You pay a 3% [fee] of whatever your rent is. It sucks, but it at least means that it won’t show up on your rent history record as having a late rent payment.”

Thompson said that paying rent with a credit card can also help consumers reap new card bonuses worth hundreds of dollars, sometimes more than $1,000. Welcome offer windows are the only time, she said, that the value of rewards will typically outweigh the cost of transaction fees for using a credit card to pay rent. 

If credit card users all paid their bills in full every month, there would be fewer downsides to maximizing rewards. But there would also be little incentive for credit card issuers to continue paying out generous benefits. Wells Fargo was losing a reported $10 million per month on the Bilt credit card partnership in part because cardholders were more fiscally prudent than the bank had estimated; their balances, The Wall Street Journal reported, amounted to 15% to 25% of what they charged.

That’s a good thing from a personal finance perspective but bad for a credit card issuer who relies on interest revenue to generate profits.