Manufactured Spending

Should You Pay 1.99% to Earn Miles on Rent Payments?

I briefly mentioned RadPad recently in a post, explaining how paying rent through RadPad is one way to unload extra Visa gift cards, since they don’t charge fees on debit card transactions. Meanwhile, credit card fees are hefty at 3.49%. RadPad just announced the reduction of the processing fee on MasterCard credit cards to 1.99%. That’s a fee of $19.90 for every $1,000. This is a much more expensive way to generate miles than to churn even the priciest Visa gift cards, which would come out to $11.90 per $1,000.

Rent house calculator

Using a credit card with RadPad is much more convenient, but is it worth the extra fees you’re paying? Personally, I can’t see myself using this service to generate frequent flyer miles. There are, however, a few instances where paying rent with a MasterCard credit card through RadPad makes sense:

1. Meeting Credit Card Spending Requirements. As I pointed out, paying rent with RadPad is super convenient – especially if you’re trying to meet credit card spending requirements. RadPad works similarly to WilliamPaid (now defunct): You make a payment to the service with your credit card and they in turn send a check to your landlord. Sure, you can make multiple trips to Safeway and Walmart in order to buy and liquidate $3,000 worth of Visa gift cards and money orders to meet the spending requirements on the Barclay Arrival Plus World Elite MasterCard, but some people prefer to pay $59.70 worth of RadPad processing fees for making rent payments directly with a credit card.

On the same note, being able to meet annual spending bonuses by paying a 1.99% premium may be acceptable to some folks out there. Prepaid cards are pretty much dead now, which means a lot of people are limited in the number of ways they can churn Visa gift cards. Using a MasterCard credit card for RadPad payments frees up spending power for other rewards credit cards.

2. No Manufactured Spending Opportunities. What about manufactured spending, you ask? I’ve been getting a lot of emails lately from readers who live in areas that aren’t MS-friendly. There are no places to buy PIN-enabled gift cards at reasonable rates or the area is lacking in places to buy money orders. For people in these types of situations, there’s still the option to buy PayPal My Cash Reload cards and load those in moderation, but that’s not a viable long-term strategy. Paying a 1.99% fee on rent payments made through RadPad might be the only alternative for some. Especially people for whom manufactured spending opportunities are scarce, who need to earn a certain number of miles quickly.

3. It’s Cheaper Than Buying Miles. Buying airline miles or hotel points can at times be a bargain. Airline miles may go on sale for 1.8 cents each and hotel points could be had for under 0.6 cents. Some people use these sales to stock up on points for premium award redemptions. Others just top off their accounts. Outside of a promotion, buying points and miles can cost much more. If paying 1.99% in fees on rent payments via RadPad is cheaper than buying miles, you have no other options for meeting spending requirements, and you plan on redeeming points for premium awards that get you well over 1.99 cents worth of value per point, then this might be a good way to go.

Do you find it worthwhile to use a MasterCard credit card for rent payments via RadPad?

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  1. I wouldn’t sell this sort of thing too short. Getting the break-even value of 2 cents/mile is pretty easy and if you can do it on a card that has a nice annual spending bonus it could make sense in a world of reduced MS opportunities.

    • I agree, though again I’d only recommend it under certain circumstances. I can personally churn gift cards for around $5.50 out of pocket per $1,000. In my case, RadPad is a bit overpriced. But it is convenient and some people will be totally ok with the fees if it helps them meet spending requirements with minimal hassle.

      • $5.50 per $1000 in gift cards? Even Sumon Mall GCs would cost more! What’s your source?

        • Interesting, my cost is $4.01 per $1,000 of MS done via GC => MO => pay credit card at bank branch. Includes portal cashback though. Ex-portal cashback, it is much higher.

  2. Just so people are aware,

    RadPad can’t split payment onto multiple cards but you can change your card every month if needed, and they only take one “payment” per month. Also, Debit card payments are fee free…

  3. We need this for mortgage payments!

  4. Ariana, this is very similar to a concept I’ve been considering, and I’d appreciate your opinion — in lieu of MS, using an online site such as radpad or plastiq to pay my mortgage and real estate taxes to churn credit cards for the sign up bonuses. Here’s an example:

    – Sign up for Chase Sapphire Preferred: need to hit $4,000 spend to get 50,000 points
    – Pay mortgage and real estate taxes to meet $4,000 spend, assume 2.5% fee = $100
    – Get 54,000 points

    What do you think? Getting 54,000 points for $100 spend seems like a great deal to me. What am I missing?

    • For meeting credit card spending requirements without the hassle of MO liquidation, I think this is a good plan. However, I’d only do it if you absolutely don’t have the time to churn Visa gift cards.

  5. Hi Ariana, do you have an email for PM?

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