Following a slow start, more renters have begun sending their April payments after the first two weeks — and credit cards are helping bridge the gap for many of the newly unemployed.
Rent payment processing firm Zego says that the number of tenants paying rent by credit card in the first week of April was 30 percent higher than the first week of March, according to the Wall Street Journal. Another firm, Entrata, noted a 13-percent increase in credit card usage compared to the first quarter.
In many cases, tenants and landlords are turning to credit card rent payments for the first time, in light of the new economic reality.
“I’d like to be able to see the balance on my credit card and not just tell the apartment manager I’m not paying…. You don’t know how they’re going to react,” one newly out-of-work renter in San Francisco told the Journal, noting that the city’s eviction moratorium wasn’t particularly assuring.
“Once we saw where things were going with this pandemic, a lot of our rules just kind of went out the window,” said one New York City landlord who is now looking to enable credit card rent payments for the first time.
Landlords have become more accepting of credit card payments in recent years, as a way to reduce late payments. While tenants have typically paid the transaction fees, more landlords are now absorbing that cost in order to bring in more rent amid the uncertainty.
Social distancing has led to a rise in electronic payments overall, and some renters pay rent by card to boost their credit scores or to receive points. But unemployed tenants relying on credit cards to tide them over may face double-digit interest rates and deeper debt, consumer advocates warn.
An earlier draft of Congress’ $2 trillion stimulus package included provisions to prevent credit bureaus from reporting negative credit information for four months, but this was removed from the final bill due to industry lobbying.
“Your rent payment isn’t the only thing you owe, and chances are you have other financial commitments you’re having to keep on track as well,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling. [WSJ] — Kevin Sun