Just because you can doesn’t mean you should


In keeping with my theme from yesterday (click here) I continue today with the question:  “Should renters be able to pay their rent with their credit cards?”  I fully appreciate that on the surface this may seem like a silly question however stop for a moment to consider the implication.  As with anything there may be a group of people who can handle their credit card properly and making a rent payment using their credit card would not cause undue financial strain.  However, I think it is fair to consider that there may be a larger group of people who would experience additional financial strain if they were given the opportunity to pay their rent with their credit card.

The Globe and Mail ran an article yesterday (Startup helps tenants pay rent, condo fees on credit card) that had me thinking about how there are better ways to help people instead of making it easy for them to make poor decisions that they may not understand the implications of.  I realize of course that some people are probably already making rent payments from their credit cards using cash advances but that action still requires some effort and thought.  By registering a credit card with a service that will automatically charge it with a rent payment means that you have removed a step for people and they no longer need to think and plan.

I have to point out two obvious problems that arise from this concept.

1.  People will pay interest on their rent payment(s) potentially adding more financial pressure to their lives

2.  Landlords who accept payment of rent from a credit card may be putting themselves at risk and should be prepared to receive the “I don’t have your rent” call

The above problems happen because some individuals who are using their credit card to make rent payments may have bigger financial issues and are enabled to continue being less than financially astute if given this option.  Notice I said “may” as I would never presume to think that everyone fits into this profile.

Not to belabor the point but earlier this year Equifax Canada, a major credit reporting agency in Canada, advised that total consumer debt was on the rise (click here for press release).  I believe that people have to make their own decisions and live with the consequences of those decisions.  But just like banks offering overdraft protection and profiting from people who may not be managing their money properly I feel that profiting by making it easier for people to go into debt by making rent payments using a credit card may be taking “responsibility for ones self” too far.  Just because you can profit from someone doesn’t always mean you should.  One day you won’t have a customer to profit from.

Jack Welch of GE said it best (but think customer not company):

“Any jerk can have short-term earnings. You squeeze, squeeze, squeeze, and the company sinks five years later.” – Jack Welch

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