Renters now pay by credit card
The COVID economic fallout left millions of renters financially struggling.
In response, more landlords are taking credit card payments, and a significant number of tenants have met their rent for at least one or two months by putting it on plastic.
While the credit card option served as an emergency lifeline to many, renters shouldn’t rely on it when their paychecks rebound, says Atlanta financial planner Vladimir Nikitenko.
Even when there’s a significant economic decline, Nikitenko recommends negotiating with a landlord to skip or reduce payment, with the shortfall to be made up later. Some local renter assistance programs may also help, he adds.
The overwhelming majority of rental payments were paper-based — check, cash or money order — the Federal Reserve of Boston found in a 2016 study.
Now, the National Multifamily Housing Council, a trade group with large-scale apartment firm members, reports that many apartment operators who’ve resisted credit cards because of the card processing fees are now accepting them, with some absorbing the fees of 2% to 3.5%, instead of passing them on to financiallysqueezed tenants.
Additionally, more third-party payment platforms, which are often used by smaller landlords, have established a credit card option or seen an increase in usage to a previous offering.
By April 2020, credit card rental payments were already 13 percent greater than the previous year, according to data from property management platform Entrata and The Wall Street Journal.
Also, the American Apartment Owners
Association (AAOA), which represents many small landlords, recently partnered with PayRent, a platform that allows tenants to use a credit card one month and an ACH or debit transfer the next.
“It’s a long-overdue modernization for the industry,” says Brian Davis, co-founder of Spark Rental, a payment platform. “Landlords have every reason to prefer electronic payments over check or cash.”
Some platforms, such as Spark Rental, report payment history to credit bureaus.
“Paying rent by debit or ACH is great and convenient if there are no extra charges,” Nikitenko concludes.