Owning a home has long been seen as a wise investment and a way to build wealth for future generations. But with home prices and mortgage rates still historically high, more than a third (38.5%) of renters say they never plan to buy a house, according to a December 2023 report from rental platform Zumper.
The study, which surveyed more than 7,600 renters between August 2023 to September 2023, also found that 69% of renters put off buying or even looking for a house because of inflated interest rates.
In nearly 90% of U.S. markets, median rents for three-bedroom homes are still lower than paying mortgage payments, insurance and property taxes on similarly sized residences, according to real estate data analysis firm ATTOM.
Whether you’ve joined the ranks of “forever renters” or are just putting homeownership on the back burner, CNBC Select has some money moves you should make right now.
Get renter’s insurance
Renters might not be on the hook for a broken refrigerator, but if there’s a robbery or fire, renter’s insurance is critical to replace what’s lost or destroyed.
Lemonade policies can be purchased for as little as $5 a month on its easy-to-use app or website, with 30% of claims settled within seconds. The digital-only company earned a relatively high 854 on J.D. Power’s 2023 survey and an excellent “A” grade for financial strength from AM Best.
Read more: To rent or to buy? A financial advisor weighs in
Additional coverage can be purchased for items not covered by standard policies, including expensive cameras, bikes, jewelry and artwork.
Lemonade Renters Insurance
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Cost
Starts at $5/month; premium depends on the coverage amount you choose
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Maximum coverage
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App available
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Policy highlights
Policy covers personal property damage caused by fire, vandalism, theft, and more; covers damage you accidentally cause others
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Does not cover
Natural disasters, flooding, power outages, your roommate’s belongings, pest damage
Currently Lemonade is only available in 28 states and the District of Columbia. While Nationwide is a bit pricier — policies start at $20 a month — it’s available in all 50 states. And Nationwide offers discounts for bundling your policies, installing a smoke detector and for not filing a claim in a calendar year.
Its policies cover legal and medical bills if someone is hurt in your home. And if you’re forced to relocate because of a covered event, you can be reimbursed for additional living expenses.
Nationwide Renters Insurance
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Cost
Starts at $20/month; premium depends on the coverage amount you choose
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Maximum coverage
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App available
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Policy highlights
Policy covers personal property damage or loss, loss of use, personal liability, medical payments to others, building additions and alterations, credit card coverage for unauthorized transactions
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Does not cover
High-value items, water backup, earthquakes, theft of items stored in motor vehicle, trailer, or watercraft; additional coverage can be purchased for these instances
Use a credit card that rewards you for paying rent
Typically, paying your rent with a credit card isn’t a smart financial move. There are usually transaction fees — typically between 2.5% to 2.9% — and you could pay interest if you carry the balance over into the next month.
But Bilt Mastercard® is designed with renters in mind: You can pay your rent without a fee and, after five transactions in a billing cycle, you can qualify for rewards points. Cardholders earn 1 point per dollar spent on rent — up to 100,000 points per year — as well as 3 points on every dollar spent on dining, 2 points on every dollar spent on travel and 1 point for every dollar spent on everything else.
The points you redeem can be used towards rent, travel and Amazon purchases.
Bilt Mastercard®
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Rewards
Earn points when you make 5 transactions that post each statement period – up to 1x points on rent payments without the transaction fee (up to 100,000 points each calendar year), 3x points on dining, 2x points on travel, and 1x points on other purchases.
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Welcome bonus
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Annual fee
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Intro APR
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Regular APR
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Balance transfer fee
Introductory fee of either $5 or 3% of the amount of each balance transfer, whichever is greater, for 120 days from account opening. After that, up to 5% for each balance transfer ($5 minimum).
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Foreign transaction fee
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Credit needed
There’s no annual fee and if your landlord doesn’t accept credit card payments, Bilt will mail them a check on your behalf.
You could also consider paying rent with a card — at least for a few months — if you sign up for a credit card with a welcome bonus that exceeds the processing fee.
The Capital One Venture Rewards Credit Card offers a 75,000-point welcome bonus if you spend $4,000 in the first three months of opening the card. That’s equivalent to about $750 in cash, which can be redeemed for flights, hotels, cruises, ride-sharing services and other travel expenses. (Cardholders also receive a $100 credit toward the Global Entry or TSA PreCheck® application fee every four years.)
Capital One Venture Rewards Credit Card
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Rewards
5 Miles per dollar on hotel and rental cars booked through Capital One Travel, 2X miles per dollar on every other purchase
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Welcome bonus
Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening
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Annual fee
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Intro APR
N/A for purchases and balance transfers
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Regular APR
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Balance transfer fee
$0 at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
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Foreign transaction fee
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Credit needed
A few rent payments could go a long way toward hitting that $4,000 minimum. Just be sure to stop using your card for rent payments once the intro period is over and factor in the card’s $95 annual fee in your calculations.
Should you pay rent with a credit card?
And if you do pay rent with a credit card — any credit card — don’t think of it as a loan: It’s not a smart strategy if you don’t have the money in your account to pay the balance before the grace period ends.
Keep an eye on your credit score
Since most landlords use credit scores when reviewing rental applications, they’re one of the most important elements of securing your dream apartment or rental home. Even if you’re happy where you are, it’s important to keep your score up in case you can’t renew or have to move unexpectedly.
To maintain at least a “good” credit score — between 670 and 789 using the FICO scoring model — you should work to make on-time payments, pay in full and not open too many accounts at once.
In addition, try to avoid hitting the credit limits on your accounts. Ideally, you want to keep your credit card utilization ratio under 30%.
More help: 6 easy tips to raise your credit score
If you have a subprime credit score — or no credit at all— Experian Boost™ can help by tracking on-time payments for bills not typically sent to credit reporting agencies, like rent, utilities and subscription services.
Experian Boost™
On Experian’s secure site
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Cost
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Average credit score increase
13 points, though results vary
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Credit report affected
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Credit scoring model used
Results will vary. See website for details.
It’s a free service but only useful if a creditor requests an Experian credit report. Your good work won’t appear on reports from TransUnion or Equifax.
See if you’re eligible for a renter’s tax credit
About half of the states only make the benefit available to renters who are older and/or disabled, according to Rent.com. Many have stringent income or rent limitations: In California, only renters who make $50,746 or less are eligible for the $60 tax credit. (Married couples filing jointly who earn $101,492 or less are eligible for a $120 credit.)
In New York, you can get a credit of up to $375, but only if your household income is $18,000 or less and your rent averages no more than $450 a month.
In most states, you can only claim the credit if your landlord paid property taxes and you don’t live with someone who claims you as a dependent.
TurboTax is a great tool to use to help ensure you’re getting the maximum deduction. It’s not free but it may be worth it if you have a complex tax situation or you’re not sure if you should take a standard or itemized deduction.
TurboTax
On TurboTax’s secure site
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Cost
Costs may vary depending on the plan selected – click “Learn More” for details
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Free version
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Mobile app
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Live support
Available with some pricing and filing options
Click here for TurboTax offer details and disclosures. Terms apply, see below for our methodology.
Save for your retirement
Homeowners can use their house as a retirement asset, either by selling it or using it as collateral for a loan. If you’re planning on staying a renter, you’ll need to save more for retirement through other strategies.
Many financial planners recommend putting at least 15% a year toward retirement. When you do stop working, it’s a good rule of thumb to have 10 times your annual salary at retirement age saved up.
If your employer offers a 401(k), take full advantage of it — including meeting your company’s matching contribution, if it’s offered.
You may also want to put additional money into an individual retirement account (IRA). Charles Schwab offers both traditional IRAs and Roth IRAs, with no minimum balance requirements. There are a variety of online retirement-planning tools, as well as on-demand counseling available from Schwab advisors.
Charles Schwab
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
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Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
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Bonus
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Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
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Investment options
Stocks, bonds, mutual funds, CDs and ETFs
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Educational resources
Extensive retirement planning tools
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Bottom line
If you don’t plan on buying a home, it’s important to optimize your credit and prepare for your financial future. Renter’s insurance, rent-friendly credit cards and retirement accounts are just a few ways to do that.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.