How to Pay Your Mortgage With a Credit Card. Best Credit Cards to Pay Your Mortgage With

If you’re trying to meet a minimum spend for a big signup bonus, or simply want to maximize your points earning, you might be wondering: Can I make mortgage payments by credit card? 

The answer is yes, though it’s not as easy as you might hope. In this post, I explain exactly how you can do so, then list seven great credit cards for paying your mortgage

It’s your credit card and it’s your mortgage. You’d think it’d be no sweat to use the former to cover the latter — and rake in credit card rewards on that hefty expense — as long as the bill gets paid. But that’s not always the case.

In fact, it’s generally a stretch to find companies that accept debt-for-debt payments. Whether you have the option to pay your mortgage by credit card depends on several factors, including the terms of the card issuer, your mortgage lender and your credit card’s network — Visa, Mastercard, American Express or Discover. 

A few third-party services let you get around some of the roadblocks for a fee, but it’s only worth it if you stand to gain more in rewards than you’ll cough up in cash. You’ll want to think through whether it’s the right move.

Can You Pay Your Mortgage With a Credit Card? How to Pay Your Mortgage With a Credit Card

So, how do you actually go about paying your mortgage with a credit card? Let’s take a look at how to do this properly. The steps are simple, just make sure you follow them!

  • Pick a card – Choose the rewards card (or cards) that offers the best sign-up bonus and fits your goals. 
  • Grab a signup bonus – Wait for and über huge sign-up bonus to be offered. 
  • Choose a payment option – Decide which payment option works best for you from the options covered in detail below.
  • Pay mortgage with a credit card – Use your rewards credit card to pay your mortgage (or other legitimate bills like your rent, health insurance, car payment, etc.)
  • Pay it off – Pay your credit card off in-full at least once a month

Can I Pay My Mortgage With a Credit Card?

Yes, you really can. Even though you may have to jump through some hoops, you can definitely use a credit card to pay your mortgage, rent, and other large bills.

Why Would I Pay My Mortgage With a Credit Card?

The whole point of paying your mortgage with a credit card is to earn additional rewards points that you’ll redeem to make expensive things cheaper (even free!). You can use these points to stay and fly for free to places like Europe, the Caribbean, and even China!

If you don’t want to travel, you may be able to redeem your points for “cash back.” You can even earn points to earn free gift cards, tickets to events, and more.

While it’s possible to use this strategy with any type of card, the biggest pot of gold comes from earning the massive credit card signup bonuses. Generally speaking, paying your mortgage with a credit card is most valuable when meeting spending requirements for a signup bonus.

Does Your Mortgage Lender Accept Credit Cards?

Whether you can pay your mortgage with your credit card depending on whether your lender allows credit card payments. Some only allow you to make your mortgage payment from your checking account by entering your checking account and routing number online or over the phone.

Cost of Paying Your Mortgage With a Credit Card

If your mortgage lender accepts credit card payments, they will likely charge a transaction fee to process the payment. You see, each time you swipe your credit card, the business accepting that payment has to pay a fee to the credit card issuer, the processing network, and other companies involved in processing the transaction. Mortgage lenders, or the companies they use to process credit card payments, would pass this 2-3 percent fee on to you. That increases the cost of paying via credit card.

Avoid Using a Cash Advance to Pay Your Mortgage

While you may be tempted to use a cash advance from your credit card to make your mortgage payment, make sure you’re aware of the risks. When you use a cash advance, whether it’s an ATM withdrawal or convenience checks from your credit card issuers, you’ll be charged a cash advance fee. Cash advance fees are often around $5 or 5 percent of the transaction amount. On a mortgage payment of $1,000, you’d pay a $50 cash advance fee. Cash advances also are charged a higher interest rate and do not have a grace period.

The lack of a grace period means your balance starts accruing interest right away rather than after your billing statement closing date.

Obstacles to paying a mortgage with a credit card

It seems that the stars have to align so that you can make a mortgage payment with your credit card. Your card network, your card issuer and your mortgage lender all have to give the green light for a mortgage payment to go through successfully. Each party has its own rules.

For example, Visa allows mortgage lenders to accept Visa debit and prepaid card payments; Mastercard allows the use of debit and credit cards for mortgage payments.

But some credit card issuers don’t allow mortgage payments. Bank of America credit cards, for instance, cannot be used to pay a mortgage. Wells Fargo credit card holders may have more luck; their cards can be used to pay a mortgage as long as the mortgage lender accepts them.

Of course, not all mortgage lenders do, but they might be more willing to accept your payment if it’s processed by a third-party payment service provider.

Third-party options for paying a mortgage with a credit card

If you’re having a hard time getting your credit card accepted for mortgage payments, you may still have the option of a third-party payment service.

One such service, Plastiq, facilitates mortgage payments with a Discover or Mastercard credit card. Visa and American Express don’t currently allow mortgage payments through Plastiq, according to Landon Howell, head of marketing at Plastiq.

You pay Plastiq a fee equaling 2.5% of your mortgage payment every time you use your credit card. Plastiq then delivers an electronic payment if the lender accepts it, or it cuts the mortgage lender a check, eliminating the need for all three companies to approve the transaction.

You can pay manually or set up automatic payments. You also have the option of making a one-time payment.

Factors to consider when paying a mortgage with a credit card

Even if you can find a way to pay your mortgage with a credit card, it may not be worth it for your budget, your credit or both. There are several factors to consider before choosing this option:

FEES VS. REWARDS

It’s tempting to pay your mortgage with a credit card if it means you could earn rewards on that typically significant bill. But the cost of a third-party processing fee can eliminate your earnings. If you have a mortgage payment of $2,500, and you’re paying a 2.5% processing fee, that’s $62.50 each time.

The cost of a third-party processing fee can eliminate any credit card rewards earnings.

Credit card reward rates vary by issuer, but it’s rare that they exceed the cost of such a fee. One exception is a credit card’s sign-up bonus. If putting a one-time mortgage payment on your card would help you meet a minimum spending requirement for a lavish bonus that far exceeds the fee, it could make sense.

THE COST OF INTEREST

Putting your mortgage payment on a credit card can result in costly interest charges if you don’t pay your credit card bill off in full every month. The long-term expense of carrying large ongoing balances would easily wipe out any rewards you might earn.

AFFECT ON YOUR CREDIT SCORES

Making a mortgage payment with your credit card will likely take up a significant amount of your credit limit and increase your credit utilization ratio, your total debt compared with your total credit limits. This figure has a significant impact on your credit scores, and ideally you want to keep the ratio low, generally 30% or lower. A mortgage payment reaching into the thousands of dollars won’t help.

A mortgage payment reaching into the thousands of dollars won’t help your credit utilization ratio.

Consider an example: Suppose you have a $10,000 limit on the credit card you want to use to pay your mortgage. Let’s say that you already have a balance of $2,000 on that card, and that your mortgage payment is $2,500. Putting that payment on your card would push your credit utilization to 45%. Add more transactions, and your credit utilization keeps climbing.

If you’re planning to make mortgage payments with your credit card, consider requesting a credit limit increase from your issuer to minimize the impact on your credit scores.

Should you pay your mortgage with a credit card?

If you can navigate the waters to make it possible, paying your mortgage with a credit card is an option, assuming the rewards outweigh the fee. As long as it won’t hurt your credit and your budget, it’s worth considering.

But if you’re already using a large chunk of your credit limit, or if you’re tight on money for bills this month, putting your mortgage on a credit card isn’t the best idea. It could hurt your credit scores and end up further straining your budget over the long term if you don’t pay your credit card bill off in full.

 Pay Mortgage With a Credit Card: Rules

Now that you know where you can pay your mortgage with a credit card, let’s cover some things to watch out for.

As you probably know, the credit card company isn’t giving you a signup bonus just to be nice. They want to make some money off of you. With the signup bonus, they are hoping to whet your appetite just enough so you’ll continue spending on the card.

You need to understand that, while the credit card companies make money every time you swipe your card, the real money is made when you carry a balance. They want to suck you in and get you addicted to their drug, so they offer you this fancy free gift so you’ll take your first sniff.

Always remember, you want to use these rewards to create more freedom for yourself, not less. As such, your job is to avoid falling for their trap at all costs.

If you don’t think you can handle it, DO NOT play the game.

To get the most out of your rewards points, you need to make sure to follow 2 simple rules:

#1) You Can Never, Ever Pay Interest…Ever

Was that clear enough? By using a credit card to pay your mortgage, you are attempting to earn points that will help make things cheaper. Paying interest on your purchases does not helping the cause.

By carrying a balance and paying interest, you pretty much defeat the entire purpose of chasing points. Besides that, your mortgage payment already has interest wrapped into it. By carrying a balance, you’re paying off your mortgage interest using a credit card loan that is probably charging you a much higher interest rate. Now you’ve created a giant shitstorm that is going to restrict your lifestyle rather than improve it.

Your goal is to get free stuff through working the system, not paying more for the stuff you already have.

#2) Don’t Buy More Than You Would Without the Card

Spending money on crap that you wouldn’t normally buy just to hit a spending limit is pretty much the definition of stupidity. For example, if you spend an extra $500 on a bedding set you weren’t planning to buy, you haven’t saved yourself any money on that $500 hotel room stay, have you?

Use the card to pay for stuff you’d normally buy or already have plans to buy. Don’t use it as an excuse to overspend.

3 Times Making a Mortgage Payment By Credit Card Might Be Worth It

Since Plastiq is the most viable option for paying mortgages with a credit card, that’s what we’ll focus on below. Here are three occasions when using the service might be a smart idea.

1. Your Credit Card Earns More Than 2.5% Rewards

As noted above, Plastiq charges 2.5% to use your Mastercard or Discover to make mortgage payments. On a $1,000 mortgage, that adds up to $25 per month, or $300 per year.

So, to make it worth it, you’d have to earn credit card rewards greater than 2.5%. One credit card to offer this is the Discover it® Miles (Review), which offers 1.5X miles on everything — and doubles your rewards at the end of your first year for a total of 3X. You can redeem those miles for statement credits, effectively earning 3% cash back.

If you paid your mortgage with the card ($12,000 over 12 months), you’d earn $360 (3%). You’d have also paid $300 in transaction fees, netting you $60 in rewards. Worth it? Perhaps. But only for the first year; after that, you’d earn a total of 1.5% cash back, meaning you’d lose 1 percent by using Plastiq.

Cash back credit cards that offer better than 2.5% cash back for non-category purchases are quite rare. One avenue to consider may be travel rewards credit cards that offer points or miles, and usually provide 1X point or mile for non-category purchases. You might be able to redeem those points or miles to get a cash back equivalent of more than 2.5% — but it’ll depend greatly on how you use the rewards.

2. You’re Chasing a Big Signup Bonus

Some credit card companies offer huge signup bonuses if you spend a certain amount within the first several months. If you get a new card and can’t meet the minimum spending requirement with your normal purchases, then paying your mortgage with the card is better than buying things you don’t need.

Take the Barclaycard Arrival Plus® World Elite Mastercard® (Review), which offers 60,000 bonus miles after spending $5,000 in the first three months.

If you normally spend about $1,000 per month on your credit card, you’ll come up $2,000 short. So, instead of spending $2,000 on miscellaneous kitchen gadgets at Macy’s, you could pay your mortgage instead.
If you used your card to pay your $1,000 mortgage for two months, you’d pay $50 in fees (2.5% x $2,000). Since this card’s annual fee is waived for the first year, that’s the only fee you’d pay.
In return, you’d get a total of 70,000 miles ($5,000 x 2X miles/dollar, plus the 60,000-mile bonus). That’s equivalent to $700 worth of travel! Or, in other words, you’d get a 14% overall return on your spending, which would totally eclipse the 2.5% transaction fee.

3. You’re Close to Achieving Elite Status

Some airline- and hotel-affiliated rewards cards offer assistance with achieving elite status when you spend a certain amount in a year.

While you probably wouldn’t be able to achieve elite status by paying your mortgage alone, doing so could help push you over the edge.

Here are two examples:

JetBlue Plus Card: Earn Mosaic status after spending $50,000 on the card in a year. You’ll get waived cancellation and change fees, free checked bags, priority security and boarding, and complimentary in-flight alcoholic beverages.
Citi®/AAdvantage® Platinum Select® Mastercard® (Review): Get 10,000 EQMs (Elite Qualifying Miles) after spending $40,000 in the first year. To achieve AA’s lowest tier elite status, you’ll need a total of 25,000 EQMs. Once there, you’ll get complimentary upgrades on flights 500 miles or less, a 40% elite mileage bonus, complimentary preferred seats, and one free checked bag.

Best Credit Cards to Pay Your Mortgage With

The options for paying a mortgage with a credit card have consistently narrowed over the past few years. So before applying for any of the cards below, verify with the card network and issuer, as well as your mortgage company, that you can pay mortgages through Plastiq — and that you’ll earn rewards.

While there aren’t any perfect credit cards for paying mortgages, here are the seven best options available today (at least when it comes to basic spending rewards). If you’re interested in using mortgage payments to reach minimum spend requirements for signup bonuses, check out the Best Credit Card Signup Bonus Offers.

Not all of them will be able to completely offset the 2.5% fee, but they could reduce it quite a bit. The travel cards, in particular, will only be able to offset the fee if you find a good redemption deal.

  1. Discover it® Miles

  2. Discover it® Business Card

  3. Citi® Double Cash Card

  4. Barclaycard Arrival Plus® World Elite Mastercard®

  5. Barclays Arrival® Premier World Elite Mastercard®

  6. IHG® Rewards Club Premier Credit Card

  7. Citi®/AAdvantage® Executive World Elite™ Mastercard®

 

References:

[1] How to Pay Your Mortgage With a Credit Card https://clubthrifty.com/pay-your-mortgage-with-a-credit-card/

[2] Can I Pay My Mortgage With a Credit Card? https://www.nerdwallet.com/blog/credit-cards/can-pay-mortgage-credit-card/

[3] Can You Pay Your Mortgage With a Credit Card? https://www.thebalance.com/can-i-pay-my-mortgage-with-a-credit-card-4171910

[4] Can You Make a Mortgage Payment By Credit Card? Everything You Need to Know https://www.creditcardinsider.com/blog/mortgage-payment-credit-card/