A Toronto- and Vancouver-based startup has found a new way for Canadians to get into debt: Putting your rent or condo fees on your credit card.
RentMoola says its service is the new alternative to the out-dated personal cheques Canadians often use to pay their rent.
The company says tenants can “eliminate late payments or bounced cheques” with monthly payments through its service, while accruing rewards points through their credit cards.
Naturally, the service isn’t free: Putting your rent on your credit card will cost you an extra 2.75 per cent, or $27.50 for every $1,000 of rent. And if you don't pay off your credit card, credit card interest rates will apply. For debit cards, there is a flat $2 fee. RentMoola says the percentage fee on credit card purchases is worth it, thanks to reward points renters will earn on their cards.
The service isn’t welcome news to consumers’ advocates who fear Canadians’ debt burdens are growing too large. Canada’s household debt is at a record high of 163 per cent of household income. Non-mortgage debt spiked 21 per cent in the past year, according to a survey from RBC.
But RentMoola argues its service is a way to be more, not less, financially responsible.
“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,” RentMoola’s Director of Customer Success, Andrew McLeod, told CBC.
Landlords have to sign up for the service if their tenants want to use it; you can enter your postal code on RentMoola’s website to see if your landlord is registered.
RentMoola told the Globe and Mail for the time being it’s focusing on large, institutional landlords, like property management companies, and will start moving into the tougher “mom-and-pop” rental buildings in 2014.
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