How To Pay Your Mortgage With A Credit Card

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Savvy miles and points collectors try to put every expense they can on a credit card to earn bonus points. What expense is larger than your mortgage payment?

Credit cardholders can pay a mortgage using a credit card, but they’ll have to jump through a few hoops to do so. Generally, it’s not a good idea for cardholders to make a large purchase with a credit card if unable to pay it off completely by the end of a monthly billing cycle. The high interest fees that accrue would outweigh any short-term benefit to making a large mortgage payment.

Related: Best Credit Card Bonuses For 2021

Mortgage lenders like banks or credit unions typically don’t accept credit card payments for a few reasons. When a credit cardholder makes a payment on a mortgage loan using a credit card, he or she essentially transfers debt from the loan to a credit card account. If borrowers can’t pay off a credit card balance in time and run out of options to make mortgage payments, defaulting on a mortgage loan becomes a possibility, which no lender wants. Some lenders also prefer not to pay any processing fees usually associated with credit card purchases. But all is not lost if you are willing to jump through a few hoops.

How to Pay Your Mortgage With a Credit Card

Even though most mortgage lenders don’t directly accept credit card payments, there are workarounds for the average credit cardholder.

Use a Third-Party Payment Transaction App

Plastiq is currently the only working payment system that lets people pay for their mortgage with a credit card, and it’ll cost 2.85% of the transaction in fees. They’ll send a check to the mortgage lender for the amount purchased. For someone aiming to get a one-time sign up bonus, using Plastiq could be a good option. Cardholders should be aware that Plastiq doesn’t support every credit card issuer nor every payment network.

Get a Prepaid Card or Money Order

Credit card holders could opt to purchase a prepaid Visa card from a grocery store or other local store and use that to make a mortgage payment online. Double-check with the mortgage lender to make sure they accept prepaid cards as online payments. If they do, there may be a small fee associated with it.

Another option is to use the prepaid card to purchase a money order then take the money order to a local bank branch to make a mortgage payment. There are several important points to consider here:

  • Double-check that the local post office or grocery store allows money order purchases using a prepaid card (or even with a credit card).

  • Make sure it’s possible to bring the money order directly to a local brick-and-mortar bank branch. Mailing a money order to a lender has its own risks and headaches — worst-case scenario the money order is lost or stolen and the borrower has to wait for a refund and make a late payment.

  • Consider any fees associated with using a credit card to purchase a prepaid card as well as purchasing a money order using a prepaid card. The fees may end up costing more than any potential rewards.

Is It Worth It To Pay Your Mortgage With a Credit Card?

Before making a mortgage payment with a credit card, determine whether it’s even possible. Cardholders should read credit card terms to determine restrictions. Cardholders should also consider which payment network they have (like Visa, Mastercard, Discover or American Express) because this could be a major hindrance to making a mortgage payment with a credit card. Check with the mortgage lender to see if any restrictions are placed on the types of payments accepted.

Once the cardholder determines if it’s even possible, he or she should think about what the ultimate goal is for paying down the mortgage with a credit card. If using a credit card is the last resort due to financial trouble, it’s probably not a great idea.

Mortgage loans typically have low interest rates (much lower than a credit card). If the cardholder can’t pay off a balance before the end of a billing cycle, higher rates would cause an increase in overall cost. Accruing large amounts of debt on a credit account would also increase a cardholder’s credit utilization rate resulting in a lower credit score over time.

Reasons to Pay Your Mortgage With a Credit Card

There are a few scenarios where paying a mortgage with a credit card could be a good idea:

  • Reaching a welcome bonus faster. Some credit cards offer large welcome bonuses that require spending at least a few thousand dollars in a specified time period. New cardholders can reach that minimum quicker when they make large purchases, like mortgage payments. If the welcome bonus outweighs any small fees associated with paying a mortgage using a credit card and the cardholder can pay off a balance before accruing any interest, it might be worth it.

  • Receiving rewards that are greater than the purchase fee. Credit cards that offer cash back rewards or points per dollar can sometimes still benefit the cardholder when paying for a mortgage with a credit card. It’s only worth it if the fees associated with making the transaction are less than the rewards. For example, if a third-party service charges a 2.5% fee for making a mortgage payment with a credit card, and the card has a 3% cash back reward, that 0.5% reward difference may be enough to outweigh the initial cost.

Related: Best Credit Card Bonuses For 2021

The Bottom Line: Only You Can Balance the Risk and Rewards

Making a mortgage payment using a credit card is possible but it may not always be the smartest strategy for credit cardholders. There are considerable hoops to jump through to make this happen. While it may be the right choice for some, each cardholder should ask him or herself: Is it worth it?

Sometimes the potential credit card rewards are worth more than any small fees incurred during the process, especially when there’s an opportunity for a big welcome bonus.

But cardholders should spend time considering all the factors before biting the bullet. Make sure the credit card’s payment network allows cardholders to pay for a mortgage with their card. For example, Visa credit cardholders will not be able to make mortgage payments on a third-party payment processing site like Plastiq.com.

Spreading out mortgage payments over time using a credit card is not an effective strategy. Be absolutely confident that the credit card balance can be paid off before the end of the billing cycle.

Cardholders in a sticky financial situation should probably not use a credit card to make a mortgage payment. Not only is there high potential for spiraling debt, but the borrower could end up having a late or declined mortgage payment or worse, could default on the loan.

Related: Best Credit Card Bonuses For 2021

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