Should I: Pay rent & taxes with my credit card?

Update: On 29 Jun ’22 CardUp announced they are being acquired by Funding Societies. This has not impacted their service offering for now and our recommendations are unchanged.

The Bottom Line

If you are willing to accept credit card rewards in the form of Airline miles and put in some effort to use the miles efficiently when redeeming award flights, it makes sense to pay your rent, taxes, school fees, insurance premiums, helper’s salary etc. using your credit card.

We recommend using CardUp to shift these transactions to your credit card and to use UOB PRVI Miles Card to earn the best rewards.

If you fly business class for your personal travel and / or you have an invite only premium credit card like Citi Ultima or DBS Insignia, that gives a reward of 1.6 miles per dollar spent (mpd) or more, you can earn thousands of dollars a year by shifting these payments to your credit card.

If you found this useful, consider signing up for CardUp & UOB PRVI via the links above. This gives you access to the best deals and helps us maintain the site.

Can you pay rent & taxes by credit card?

Ordinarily you cannot use your credit card to pay for a number of large expenses such as rent, school fees, taxes etc. In recent years, however, a number of services have popped up that allow you put these expenses on your credit card.

In Singapore these include:

– CardUp

– RentHero

– ipaymy

– Citi PayAll

– SC EasyBill

– UOB Payment Facility

These companies charge a fee of between 1.7-2.6% of the transaction value but allow you to earn your regular credit card rewards for all this spend.

Their pitch is that the value of the rewards you earn is higher than the fee you pay and therefore it is worthwhile to do this.

Does the math work?

Sometimes, for some people.

Whether it works for you or not will depend on things like whether you fly business class or economy for personal trips, the destinations you usually fly to and how flexible you can be with your travel.

The math is very likely to work for you if you often book business class tickets for your personal travel. That’s because airlines typically give much higher value for a reward mile when you redeem a business class ticket.

If you usually travel economy class for personal trips, the math could still work for you if you are willing to be flexible about where and when you fly. It should also work if you anyway usually fly to destinations where award flights are excellent value e.g. long distance flights.

Otherwise there is a risk that you end up paying too much fees to these service providers and don’t get enough in return.

Cashback Cards

Let’s look at the easy part first. The math does NOT work with most cashback cards.

All spends via these services only earn the so called “base rewards” on your credit card.

For most cashback credit cards the base reward rate is 0.2-0.3% of the amount spent. This is the case for popular cards like POSB Everyday Card, OCBC 365 and Citi Cash Back.

That is a lot lower than the 1.7-2.6% fee you will be paying and so does not make sense.

Many cashback cards offer 2-10% rewards on categories like dining, grocery etc. However anything you spend on these services will not qualify for the higher cashbacks.

Then you have cards like the Standard Chartered Unlimited and Citi Cash Back+, that offer 1.5-1.6% cashback on all spend. This also does not work because the fee (1.7-2.25% for Visa & MasterCard) is largely higher than cashback rate.

One of these cashback cards, the UOB Absolute, offers 1.7% cashback but it is an American Express (Amex) card and these services either do not accept Amex or charge a higher 2.6% fee for Amex transactions.

Again, the math does not work.

Finally in this category, you have cards like UOB One, HSBC Advance and Maybank Platinum. These cards offer cashback rates of 2.50-3.33% on all spend but cap the cashback at S$33-70 per month.

Theoretically the math works for these cards but only in a very narrow range of spends. The calculation for the range in which these cards works on CardUp is shown in the table below.

Table 1: Spending Range to Breakeven on CardUp using Cashback Cards

For e.g. with HSBC Advance, you need to spend at least S$2,000 a month on the card to get the 2.5% cashback. Anything less and you get 1.5%, which doesn’t work.

But if you spend more than S$2,800 in a month, then you hit the cashback cap of S$70 and your effective reward rate starts to fall. Above a spend of S$3,111, your reward rate is likely to fall below the fee you are paying to these services.

As long as you can stay within these ranges, then, these cards can be used to pay your rent etc. and leave you better off or at least neutral.

However we think the ranges here are too narrow to be practical for most people.

Rewards Cards

The math for these services is much more likely to work with rewards cards, especially airline miles cards. But it still depends on how much value can you extract from each airline mile.

Which means that if you are not the type of person who is willing to spend the time and effort necessary to get the best value for your reward miles, these services are probably not for you.

Simply paying rent / taxes using these services and collecting the reward points or miles will not necessarily be a good deal for you. There is a good chance that you end up losing money in that case.

The table below shows the effective discount you get with the base reward rate on a credit card, depending on how much value per mile you achieve.

Table 2: Breakeven Value per KrisFlyer mile by Base Reward Rate

The shaded portions show the combinations that can work on CardUp. Orange shaded cells show when the rewards are worth more than the promotional fee. Teal shaded cells show when rewards are better than full fee (only for Visa and Mastercard).

The higher the base rewards on your card, the easier it is to breakeven or benefit by using these services. The more value you can get per mile while redeeming flights, the more you benefit from these services.

Our base case value of a KrisFlyer mile is 1.4¢/mile. This is a very conservative value that should be seen as a floor price for a mile – something everyone can easily achieve over time. People willing to go the extra mile (heh heh!) can get higher value, possibly as much as 2-3¢/mile.

At 1.4¢/mile the math doesn’t always work.

This is because the rewards cards with highest base rewards rate (which is what you earn when paying rent etc. via these services) give you 1.4 mpd. These are cards like UOB PRVI, Standard Chartered Visa Infinite and UOB Visa Infinite Metal.

1.4¢/mile and 1.4 mpd works out to 1.96% reward. This is more than the promotional fee rate on services like CardUp but lower than their base fees of 2.25%. It works while the promotions are running but will cost you money once you start paying full fees.

If you have a large one-off payment where you can get the promotional rate, you should do that. However if you are planning to put a recurring transaction on a promotional rate, you will need to track that closely because once the promotional rate ends, you lose money on subsequent transactions.

If however, you are confident of achieving a higher value per mile when you redeem rewards, say 1.6¢/mile, you can achieve breakeven on these services even while paying full fees of 2.25% and anything higher means you are getting paid to use them. At 2¢/mile, even a credit card with base reward rate of 1.2 mpd works.

It is worth pointing out that if you are willing to put in some effort/ are flexible, getting 1.6¢/mile is not that hard. In our testing we saw rates more than 1.6¢ nearly half the time, and we tried to book tickets during school holidays.

We do not use those values in our base case because we think most people don’t know, don’t care or can’t do what it takes to get those values consistently. But its not hard.

What if I am really rich?

If you are rich enough to fly business class for your personal travel or if you are rich enough to get invite only luxury credit cards like DBS Insignia or Citi Ultima or even better, both of those, then these services are made for you. In that case you are leaving a lot of money on the table by not using these services to pay your rent, school fees, taxes etc.

These invite only cards give rewards of 1.6 mpd or more on all spend and you can comfortably achieve more than 2 or even 2.5¢/mile in value redeeming business class tickets. At that point, you not only get back the fee you pay for these transactions but you can reap big rewards on top.

The table below shows one possible scenario for a Really Rich™ person.

Table 3: Potential Reward for High Spenders with High End Cards

Which service is the best?

CardUp is the best service in Singapore for making rent, tax and other such payment using credit cards.

It accepts the widest range of cards and permits the most types of payments to be put on your credit cards including rental, taxes, school fees, helper’s salary, insurance premiums etc.

More importantly, CardUp offers you the best chance of getting more rewards for these transactions than the fee you pay for them.

We also recommend using the UOB PRVI Miles Card with CardUp to maximize the rewards you earn as it pays 1.4 mpd, which is the highest most people can earn for these payments, and has an annual fee of S$256.80, which can be waived if you spend more than S$50K a year on the card.

Other cards which offer 1.4 mpd, like the Standard Chartered Visa Infinite and UOB Visa Infinite Metal have a much higher and non-waivable annual fee of S$588.50 and S$642 respectively.

Of course, if you have the invite only cards like UOB Reserve or DBS Insginia, which pay 1.6 mpd, you should use those.

How we picked?

We compared 6 platforms providing this service and compared them on the fees they charge, the types of payments you can make with them, how many cards they accept and how easy or hard it is to recover their fee from credit card rewards on each platform.

Table 4: Supported payment types and credit cards

To figure out which platform makes it the easiest to recover the transaction fee with credit card rewards, we divided their fee rate by the miles you earn per dollar of spend (mpd) using the best rewards card for that platform.

Table 5: Breakeven Value per Mile by service

If you use UOB Payment Facility, your rewards are capped at UNI$2.5 per S$5 spend, or 1 mpd, no matter which card you use. This means you need to get 1.80-2.70¢/mile when you redeem flights with the miles you earn on these transactions to recover the transaction fee.

While not impossible, this can be a high bar for people who usually fly economy i.e. most of us.

Standard Chartered and Citi both offer credit cards that have base reward of 1.2-1.4 mpd. However, these cards (Visa Infinite, Visa Infinite X for Standard Chartered, Prestige for Citi) have high (S$500+) and non-waivable annual fees because of which we did not consider them.

The other cards from these bank only offer 1 mpd, again making it hard, though not, impossible to recover your transaction fees.

Citi PayAll, SC EasyBill and UOB Payment Facility all permit only credit cards issued by their own bank.

RentHero offers the cheapest fee rate of 1.75% for rent payments. However, according to their website,  they accept only DBS Altitude card which pays 1.2 mpd.

You only need to achieve 1.45¢/mile when you redeem flight to breakeven on your RentHero transactions which is a low bar. So while RentHero is a solid choice if you have the DBS Altitude card and only want to shift rent payments to your credit card, it was not our top pick overall because of limited choice of cards and transactions.

Both CardUp and ipaymy accept most major cards, allow many types of transactions to be shifted to your card and have an identical headline fee of 2.25% of the transaction value.

We preferred CardUp because it had more promotions at the time of writing and we found the user interface to be slightly more intuitive and polished vs. ipaymy. But both services are quite easy to use and the difference was not large.

CardUp also accepts American Express cards, which ipaymy does not. However the fee for using an Amex card is 2.6%, so we don’t recommend it as a first choice.

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