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Desperate times call for desperate measures and this is why many of us turn to our credit card in financial despair. Your credit card works on credit; however, while it may seem like this is free money from the bank, it most certainly is not! You will be charged an interest rate that can add up very quickly if you are not careful. While you may be stuck paying your rent with a credit card, it is critical that you break this habit as quickly as possible with these budget friendly tips.

Pros to Using Credit Cards

There are some instances where paying rent with a credit card is actually beneficial to you. If you do have a credit card that works on bonus points or air mile points, then the more purchases you make, like buying princess party decorations, the more points you get. However, not all credit cards work this way. If you are working on a reward system then you may be able to score a free trip by putting all your purchases, including your rent, on your credit card.

However, if you are using your credit card for rent then you need to be sure that you are paying it off in full, after the allotted 'free time' before interest starts piling up. Most credit cards allow their customers 21 days to pay off the debt before they start charging interest. If, for example, you put $1000 per month on the first towards rent, then you will have until the 21st of the month to pay this off before interest starts accumulating on this purchase. If you do not pay it off, then you can expect to be paying $1000 plus interest which is generally around 20 percent. This means you are paying much more than you need to for your monthly rent.

If you do manage to pay your credit card off before the interest settles in, then you will still be paying the same amount for rent as if you are using another method of payment. However, this is a tricky business and you need to have a specific day that you pay off your credit card to make this system work. For super organized financial gurus, this may work; for the budget-challenged, however, this may be too advanced and you could end up in the red real quick.

Budgeting for Rent

For most people, your credit card is pulled out at the end of the month when there is simply no more money left in the account. Because rent is usually due at the beginning of the month, many renters do not have the money at this time. This is why they reach for the credit card.

Sit down and go over your finances to find a way to actually make the rent every month on your money, not borrowed money. Write down what you earn each month and what your expenses are. If you are spending more than you earn, it's time to cut back as much as possible so that you are well in the green every month.

Paying rent with a credit card is not necessarily a bad thing if you are able to manage your finances and pay the amount back in full before the 21 days. However, if not, then it is best to stay away from any type of credit money and stick to what you have. Budget so that rent is the first thing that comes out of your pay check so that you are able to make rent every month without reaching for your card.

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