This New Credit Card Is Trying to Help Renters Save for a Down Payment with Points
Hopeful homeowners often come up against a common problem when trying to buy their first home: saving up a down payment. Stashing away a substantial amount of money to put down on a new home can be especially hard for those who live in areas where the rental payments far exceed what you would pay for a mortgage. The new Bilt Rewards credit card might be a solution for some renters, who can earn points every time they use the card to pay their rent.
Here’s how it works.
Renters who live in qualifying properties and apartment complexes can use the Bilt Rewards Card to make their monthly rental payment. These payments will then be eligible to earn points (from 250 to 4,000 per month), which hopeful homeowners can then exchange for cash. Considering how expensive rent is in some areas — people can expect to pay anywhere from several hundred to several thousands of dollars a month for their room and board — those points can really add up.
Is it too good to be true?
According to Dr. Ann Kaplan, a finance expert and CEO of iFinance, as long as there are truly no fees associated with the card — Bilt says that landlords don’t charge a transaction fee when you use your Bilt Rewards Card, unlike the typical three percent that most people would see — it could be a win-win for renters. “I am a firm believer in point programs that do not have a fee attached to them, including an opportunity cost,” she explains. “This means if you can gain access to points by paying your rent with the Bilt Card (and then paying off the card in full before the payment due date), then there is absolutely no downside, you will receive points at no additional cost to you.”
The card can help you build your credit.
As an added bonus, Kaplan says that a card like this may even help you increase your buying power. As long as you keep your payment current, and pay off your balance each month, your credit rating may actually increase. However, added buying power can also lead to added debt… so it’s important for renters to make sure they’re using their credit wisely.
You might not save as much as you think.
While putting any money aside for your future home is a good thing, you might not actually rack up the savings using this method. “It is best to analyze what the actual monetary return/opportunity is of using the Bilt credit card,” Kaplan explains. “If you only used the card for rent and you reached the monthly cap of 4,000, that means you would earn $500 per year at a redemption rate of 1.5 cents per point.”
While it sounds like the Bilt Rewards Card does have some benefits, it’s not going to be the only answer to your down payment woes.