A new service called RentMoola is encouraging Canadians pay their rent or condo fees with their credit card or debit card.
In the days of high credit card debt, it’s a controversial idea. Canadians are already carrying high balances on their credit card bills, and people who cannot afford cash or a cheque for their rent may already be in financial difficulty.
But cheques are falling out of favour, with both consumers and rental agencies looking for a more convenient way to pay, Andrew McLeod, RentMoola partner, said in an interview with CBC's Lang & O'Leary Exchange.
Landlords may love RentMoola, as it allows them to get their money up front, with little risk of default and no fees.
For the tenant, there are fees involved – just $2 if they pay by debit. But credit card payment packs quite a large premium — 2.75 per cent — that would work out to $41.25 on rent of $1,500 a month.
RentMoola makes money by taking a slice of the 2.75 per cent fee and the rest goes to credit card company.
The benefit is the chance to collect points and loyalty rewards on the card, as well as RentMoola perks, says McLeod.
“We actually have two options – you can either pay by direct debit or you can pay by credit card and the fee for direct debit is only $2 and the 2.75 per cent fee for a credit card, it is offset by our perks program. Tenants get discounts on cable, internet, home phone, on taxis, rental cars,” he said.
It also provides flexibility.
“It can be a form of bridge financing. So if you’re a student and you’re looking at getting paid on the 2nd of the month, you won't default on the rent,” he said.
With operations across Canada, the company is focusing on enlisting large property-management firms. It says it has 100,000 units so far.