You’ve found the perfect apartment in the perfect apartment market. You’ve passed the credit check. The landlord is a kindly old lady from a far-away land. She treats you like her granddaughter — except there’s no way on earth she will accept a credit card payment for rent, even if you bake cookies for her. Why won’t she take your plastic?
1. The payment must come from the legal tenant, and the legal tenant alone
In most jurisdictions, the acceptance of rent means that whoever actually paid the rent is considered the tenant by law. A credit card may have the tenant’s name on it, but if the card has a co-signer, it is possible that the co-signer may be considered the tenant. This complicates the landlord-tenant relationship, both of whom have legal obligations and responsibilities. If you get into a fight with the landlord, it’s possible that the co-signer may end up facing certain consequences. For example, if you move out and leave the place a mess, the landlord will have to spend money cleaning it. If those costs exceed your deposit, the landlord may have legal recourse not only to you, but to your co-signer.
Furthermore, it is possible that in a legal dispute, since it was the credit card company that made the actual payment to the landlord, it may be the tenancy is assigned to the credit card company. Whether or not these situations would be upheld in a court of law is too broad to discuss here. The point is that it exposes the landlord to risk that they don’t want to bear. He rented the apartment to you. He wants a clear chain of contractual fulfillment from you.
2. Landlord liability
Rent must usually be paid on or before a specific date. The credit card company may not actually remit payment to the landlord by that date. Should there be a dispute with the tenant, this can create a problem for both parties. The tenant can be accused of not paying on time and be served with an eviction notice. The landlord can be accused of having accepted a late payment without consequence, allowing the tenant to escape late fees or possibly eviction.
Furthermore, credit card payments are subject to dispute. Just as you can dispute a charge for a service provider who doesn’t fulfill his obligation, a tenant could theoretically dispute the rent charge. For example, if you get into a fight with the landlord over him not fixing your leaky toilet, and you dispute the entire rent charge, he’s going to get angry. It may be well within your rights, but the point is that the landlord doesn’t need this headache when he can just take a check and deposit it.
3. Credit card fees
All credit cards charge an interchange fee to the merchant, which in this case is the landlord. No landlord wants to pay that fee, which could run from 2% or even more. Most landlords enjoy a net profit (“NOI cap rate”) of only 7-8%. That fee is a big chunk of his profit. He doesn’t want to give away a quarter of his profit.
4. Cash is king
Some people like the cash-back option on credit cards because they feel no bonus is better than cold hard cash. The same thing applies to a landlord. They want cash (or check) in hand. No fuss. No headaches. It’s a clean and simple transaction without running into issues that come from credit cards.
Of course, these are general guidelines. It’s entirely possible that your particular landlord may permit you to charge your rent on your credit card. As the saying goes, “If you don’t ask, you don’t get.”
Landlady with cash. Image via Shutterstock