Paying security deposit and first/last month's rent upfront?

[Member 331305]

So MS1 is just around the corner (July ), and I'm going over the logistics of getting an apartment. My plan was to use some of my savings to cover the security deposit and then use my financial aid to cover the upfront payment of the first/last month's rent. However, I just learned that my med school disburses funds only after we are registered for classes. If I want to be moved-in by orientation, then I will need to find another way to pay for first/last month's rent.

Should I charge these upfront payments to a credit card and then pay-off the credit card later with my financial aid? Is that even legal? I could also drain my savings account, but I'd like to avoid that if possible.

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[Ost3oclast]

That credit card idea would work I assume. Probably better than draining your savings.

 

[Doctor Strange]

My parents are paying the upfront charges, and I'm paying them back when my loans are disbursed.

 

[milkphlegm]

In my experience (in Boston), you can't use a credit card for the first and last month's rent, as they want a check. However, if they let you do it, I don't understand why it wouldn't be legal for you to use the credit card and then use your loans to pay it off. Once you get the stipend that you use for living expenses, they have no idea where that money goes or how you spend it.

If you wanted to use your loans anyway, it's all the same if you "drain" your savings account and put the same amount of money back in your savings once you get your loans. My parents paid for my apartment up front and I also paid back the deposit, etc. once I got a job/loans.

 

[Gauss44]

So MS1 is just around the corner (July ), and I'm going over the logistics of getting an apartment. My plan was to use some of my savings to cover the security deposit and then use my financial aid to cover the upfront payment of the first/last month's rent. However, I just learned that my med school disburses funds only after we are registered for classes. If I want to be moved-in by orientation, then I will need to find another way to pay for first/last month's rent.

Should I charge these upfront payments to a credit card and then pay-off the credit card later with my financial aid? Is that even legal? I could also drain my savings account, but I'd like to avoid that if possible.

Yes. You can go to www.bankrate.com and find a credit card that offers 0% apr on balance transfers for a year. Then request a balance transfer check to yourself. Deposit that check in your checking account so you can pay rent, 1st/last/security. As long as you don't take out more money than you can pay off before the promotional period (usually one year) ends, you should be fine. As always, read the fine print, but I don't suspect any surprises. Obviously, make the minimum payment each month which should be tiny, like $50 est. If you have 0% apr, all of what you pay should go toward your balance. Balance transfers generally come with a 3-4% one-time fee which shouldn't be an issue.

 

[Ost3oclast]

My parents are paying the upfront charges, and I'm paying them back when my loans are disbursed.

This is exactly what I'm doing.

 

[rain4venus]

Yes. You can go to www.bankrate.com and find a credit card that offers 0% apr on balance transfers for a year. Then request a balance transfer check to yourself. Deposit that check in your checking account so you can pay rent, 1st/last/security. As long as you don't take out more money than you can pay off before the promotional period (usually one year) ends, you should be fine. As always, read the fine print, but I don't suspect any surprises. Obviously, make the minimum payment each month which should be tiny, like $50 est. If you have 0% apr, all of what you pay should go toward your balance. Balance transfers generally come with a 3-4% one-time fee which shouldn't be an issue.

I don't know if this is the standard for this card, but I have the Capital One Cash Rewards card and my balance transfer fee is only 2%. WAAAAY less than what I'd have to pay in interest if I charged an amount like this to a card. I have a couple other cards that give me 0% for a year with a balance transfer, but they all have 4% fees which is not nearly as nice.

Remember, though, that you probably want the card to be completely paid off before writing this check to yourself, and don't use it anymore until you get the rent check paid off. The way capital one does it, at least, is to apply the minimum payment to your lowest interest balance (in this case, the rent check at 0%) and then anything on top of that goes toward the higher-interest balances (like any purchases you've made). So if you only make minimum payments, you get charged interest on your purchases, and don't pay down that balance at all, and so you get charged more interest each month because you're paying interest on the interest you've already racked up. So make sure it has a zero balance before your balance transfer, and don't use it for purchases.

 

[survivordo]

Pay everything you can with a credit card! You should be able to find one that is 0% APR and gives you points! Make sure you pay it off though...

Survivor DO

 

[rain4venus]

Some apartment complexes will also give you a discount for paying your lease off in full when you sign it. If you've got a credit card with a high enough limit, this is also an option.
If you get a 5% discount on your rent, and pay a 2-4% balance transfer fee with 0% interest for 12 months, you're still saving a little bit. Then just make your monthly rent payments to your credit card company instead of your apartment office.

 

[rain4venus]

Some cards will consider that a cash advance which in addition to having a fee may not be covered by the 0% APR. so really read the fine print

Always good advice. There definitely are cards that will let you do what Gauss44 (and then later I) suggested, but be 100% sure that the card you use won't end up counting it as a cash advance.