This post comes from Michael Dolen, the founder of CreditCardForum, which is the Internet’s #1 message board and blog about credit cards. WilliamPaid does not promote the unnecessary use of credit cards and recommends paying off your credit card bills in full each month.
There have been a number of discussions on CreditCardForum about making rent payments using a credit card, namely, for the purpose of earning rewards. Unfortunately to do so has typically been a losing proposition for two reasons:
- Prior to WilliamPaid, it wasn’t a mainstream optionWith WilliamPaid, you have the ability to pay virtually any landlord using credit card payments. Before their existence your options to do so were limited; very few property management companies accept credit cards on their own. So when people wanted to use cards for payments, they had to come up time-consuming (and expensive) solutions on their own such as (a) sending credit card payments between two Paypal accounts, (b) then transferring the money to a bank account, (c) waiting for the funds to clear, (d) writing a check from that bank account, and (e) mailing the check to the landlord. Whew - that ís a lot of work just to make a rent payment!
- Normally the processing fees far exceed the rewardsProcessing fees vary depending on the type of card used. If you know a bit about the industry, then you already know it costs quite a bit more to process payments for reward cards ñ around 3% or above is typical. Obviously, earning rewards on normal spending (i.e. rent payments) which are equal or greater than 3% is almost impossible. Going back to the Paypal example mentioned above, their standard fee they charge for credit cards is 2.9% + $0.30 so not only is it a hassle, but also too expensive to come out ahead.
That was how it used to be, but then I heard about WilliamPaid and their LOW fees.
As soon as I heard about WilliamPaid, their services sounded almost too good to be true, so I got in contact and grilled them with all sorts of questions. Much to my surprise, there are no gimmicks or fine print tricks - WilliamPaid is the real deal! For payments involving credit cards, you are charged a flat processing fee of only 2.45%. Thatís almost a half-percent less than Paypal! I know the difference may not seem significant, but let me give you three examples demonstrating how it might be possible to break-even, or maybe even come out ahead, thanks to WilliamPaid’s ultra-low fees.
Example #1: Using a credit card which offers 2% rewards
As you know, most cards offer rebates of 1%… not very exciting. But did you know there are few on the market that give rewards worth a full 2% rebate? To the best of my knowledge, there are currently 4 on the market right now:
- Capital One Venture ñ 2 miles for every dollar spent. Since each mile is equal to 1 cent that can be spent on travel, this card is basically giving you a straight 2% rebate. The Capital One Venture does carry an annual fee of $59.
- Discover Escape ñ This has a rewards program that is basically the same as the card above. However the benefits are different and the fee for the Discover Escape is $1 more at $60 per year.
- Fidelity Rewards American Express ñ They offer 3 different versions which give you a flat 2% cash back and best of all, none of them have an annual fee. The only catch is you need to have a Fidelity account to get their credit card (sidenote: some Fidelity accounts can be opened for free).
- Household Bank Credit Card ñ If you have bad credit and want to earn 2%, then the Household Bank credit card may be right up your alley. There is a $39 secured version (for bad credit) and a free unsecured version (for fair credit) and both of them pay 2% cash back.
If you used one of these credit cards to pay your rent through WilliamPaid, the 2% cash back would largely offset the 2.45% fee (about 80% would come back to you in the form of rewards). That may not be breaking even, but it sure is coming pretty darn close.
Example #2: Maximizing a travel rewards card
If you want to earn rewards that come even closer to matching (or possibly beating) the 2.45% fee, then your best bet will probably be a travel rewards credit card. Let me give you an example:
Starwood Credit Card: Although this American Express card is branded as Starwood hotels, the points can be converted to dozens of different frequent flyer programs at very lucrative conversion rates. If you redeem your points the right way, you might be able to realize a value of 2.3 to 2.5 cents per point. Since you earn 1 point per dollar spent, it may be possible to offset the 2.45% fee for your rent payment. You can read my Starwood credit card review to learn more about it.
Example #3: Qualifying for spending bonuses
Obviously, spending frivolously to earn 1% or 2% is foolish, to say the least. But paying rent is not the same as buying new clothes or going to the bar. Your rent payment is a fixed expense that you have to pay no matter what… it’s definitely not frivolous spending! With some credit cards, the extra spending your account would have by charging rent payments might let you qualify for spending bonuses that will let you come out ahead. Let me give you a couple different examples:
American Express Premier Rewards Gold ñ Due to its hefty annual fee this card is not for everyone, but for those who do have it, they get a 15,000 points bonus every year their spending hits $30,000. I know for my personally, hitting that $30k is not easy to do. However if I charged a few rent payments ($1,200/month) then I would be able to hit it no problemo. Although I would be paying the 2.45% fee, with the 15k yearly points bonus in addition to the regular points I would be earning, I should come out ahead. Here is my review of the Gold American Express.
Chase Sapphire Preferred ñ This is that card Chase has been running commercials for non-stop lately. With the rewards program, the max value you can get is around 1.25%. However for new accounts they’re giving a 50,000 points bonus ($500 to $625 value) if you spend $3,000 within the first 3 months. Now I don’t know about you, but spending $3,000 in 90 days isn’t always easy to do. However if you used that Chase Sapphire offer to pay your rent through WilliamPaid, it would be a lot easier to reach that $3k mark so you could score that big fat bonus.
Conclusion?
I donít know of any other service like WilliamPaid, especially one that offers fees this low for reward card payments. As you can see from the above examples, their fees are so low that you might actually be able to come out ahead or at least break-even. I am so impressed by their service, I am recommending it to CreditCardForum readers!
Disclosure: Please note that CreditCardForum has advertising relationships with most major credit card issuers, including many that were mentioned in this article. Regardless, everything I told you about them is my honest opinion.
