Using a new credit card could boost credit scores and help move to homeownership, though it would take 10 years to accumulate $6,000 if paying $1,500 per month.
NEW YORK – A real estate startup wants to help renters become homeowners. Bilt Technologies teamed with Evolve Bank & Trust and Mastercard to launch a credit card that enables cardholders to accumulate reward points they can use toward rent and other bills – or a down payment on a future home.
Many property providers already accept credit cards for rental payments, and using a credit card can help renters improve their credit scores, an important component of buying a house.
“We believe paying rent should build your credit score because it’s your single largest liability,” Bilt founder Ankur Jain told The Wall Street Journal. The new credit card does not have any added fees.
Bilt says that if a cardholder wants to use their points for a down payment on a home, the card operators will convert reward points into cash and deposit the money into an escrow account.
“It should be a path to homeownership,” Jain says.
It takes time to accumulate enough points to make a sizable down payment, however. A cardholder who spends about $1,500 on monthly rent for 10 years would accumulate only enough points for a $6,000 down payment.
Using a credit card to make rental payments also comes with a warning: Pay it off every month. Credit cards usually come with high interest rates. The Bilt card, for instance, has an interest rate between 15% and 22.5%.
Source: “Renters Could Collect Home Down-Payment Points With Credit Card,” The Wall Street Journal and Mastercard
© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688