Using a Credit Card for a Security Deposit
Where deposits can go on a card
Security deposits for utilities, some apartments, car rentals, and equipment rentals can often be charged to a credit card. Paying by card means the refund comes back to the card, and you may earn rewards on the deposit in the meantime. It also creates a clear paper trail, which helps if you need to dispute a wrongly withheld deposit later.
Watch the fees and holds
Two cautions. Some payees add a processing fee (often around 3 percent) for card payments, which can exceed any rewards, so the deposit is only worth charging if it is fee-free or the rewards beat the fee. And a large deposit or authorization hold ties up part of your credit line and can raise your utilization until it is released.
Use it wisely
Charge a deposit to a card when it is fee-free, you have ample available credit, and you can pay it off so you never carry interest on it. The dispute protection and refund-to-card convenience are real perks. If a fee applies and there are no rewards to offset it, pay by bank transfer instead.
Frequently asked questions
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