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Paying rent - out of savings, or on credit card?

Discussion in 'General Investing Discussion' started by mustgroove, 3rd Mar, 2010.

  1. mustgroove

    mustgroove Member

    Joined:
    16th Dec, 2009
    Posts:
    12
    Location:
    ACT
    Bit of a simple query here... Here's my situation:

    - I pay rent fortnightly
    - I have a credit card with a 55-day interest-free period... I use it for pretty much all my living expenses, and pay off the entire closing balance each month so I'm never paying interest...
    - I have a bunch of savings in Ubank.

    In order to maximise the interest earned on the Ubank savings, would it better to:

    1) Put rent on the credit card along with other living expenses, and then pay it off monthly as usual; or

    2) Schedule a fortnightly internet transfer directly from Ubank to the landlord?

    Seems to me that 1) would be better because that way the rent money stays in the account (earning interest) for longer... or is it really much over muchness?
     
  2. ashwright

    ashwright Well-Known Member

    Joined:
    30th Nov, 2007
    Posts:
    116
    Location:
    Brisbane, Qld
    I think it depends on what additional cost the landlord changes for credit cards. My real estate office, changes 3%, which is not worth it.

    I get 0.8% interest (55days @ 5.72%pa) and 0.5% in reward points (cash vouchers etc.), so unless I can get the credit card change less the 1.5% it is not worth it.
     
  3. mustgroove

    mustgroove Member

    Joined:
    16th Dec, 2009
    Posts:
    12
    Location:
    ACT
    Hmmm the surcharge issue was something I hadn't considered... my landlord uses the DEFT system (DEFT) and I've just checked - there's a 1.5% surcharge on Visa payments...

    Fortnightly bank transfer it is :)
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    I came to pretty much the same conclusion when I investigated the option of paying rent via credit card - really not worth it.