If your budget is stretched thin or you want to lock in rewards, you might wonder: Can you pay a mortgage with a credit card? After all, you can use your credit card to buy all kinds of goods and services.
While paying your mortgage with your credit card is possible, it's more complicated than making everyday purchases. That's because mortgage companies generally don't allow credit card payments and credit card companies may not let you charge mortgage payments. A third-party payment service can help circumvent these roadblocks, but there are pros and cons to consider.
Pros and cons of paying your mortgage with a credit card
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When does paying a mortgage with a credit card make sense?
There are a few reasons to consider paying your mortgage with a credit card.
To earn credit card rewards
Using your card for mortgage payments can be an easy way to build your rewards balance. It can make sense if your rewards rate is higher than the processing fee you pay to charge your mortgage payment.
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For example, third-party payment service Plastiq charges 2.9% to process mortgage payments using a Mastercard or Discover credit card (Visa and American Express don't participate in this service). If you earn at least 3% in rewards, you will come out ahead—but only if you pay off your credit card balance and avoid interest charges.
To cash in on a welcome bonus
Charging your mortgage payments can help you meet the spending requirements for banking a credit card welcome bonus. For example, with the card_name, you will bonus_miles_full.
With the average mortgage payment in the U.S. hovering around $2,300, you might meet the spending requirements in a month or two. You'll come out ahead with a large-enough bonus, even if you pay a processing fee to charge the mortgage payment—provided you pay off your next credit card bill.
To give yourself more time to pay
A credit card can come in handy if you don't have the cash to pay your mortgage, but expect to have it soon. For example, your paycheck could arrive after the payment is due. You can avoid making a late mortgage payment—and the penalties that accompany it. However, this only makes sense if you can pay off your next credit bill to avoid interest charges. Otherwise, you could end up with a ballooning credit card debt that is difficult to pay down.
How to pay your mortgage with a credit card
Paying your mortgage with a credit card is more complex than making everyday purchases. There are two main options to consider.
- Use Plastiq. Plastiq is a payment platform that lets you pay any bill (mortgages included) with your Discover or Mastercard credit card in exchange for a 2.9% processing fee. After you set up a one-time or recurring mortgage payment, Plastiq sends a payment to your lender via check, ACH transfer, or wire transfer. In some cases— such as when using a card issued in certain countries—additional fees may be applied. (You will be warned about this before the payment goes through). Expenses can be offset by participating in the Plastiq referral program or taking advantage of occasional promotions.
- Buy a prepaid debit card. If your mortgage company accepts debit cards, you can use your credit card to buy a prepaid American Express, Discover, Mastercard, or Visa to make a payment. These cards are sold at retail stores, including big chains such as Target and your local grocer, with activation fees of up to $10. If you pursue this option, keep in mind that mortgage payments probably won't earn any credit card rewards.
Example of paying a mortgage with your credit card
Say your mortgage payment is $2,500, you earn 1% on credit card purchases, and you use Plastiq to pay your mortgage. You earn $25 in credit card rewards, and the 2.9% processing fee comes out to $72.50, meaning you take a $47.50 hit ($25 – $72.50). If you earn a 2% reward, you lose $22.50 ($50 – $72.50); with a 3% reward, you pocket $2.50 ($75 – $72.50).
Of course, that’s all assuming that you pay your credit card bill in full every month. If you miss the deadlines, you’ll also be charged interest on your credit card balance. And those rates can be quite steep.
When can you not pay a mortgage with a credit card?
Sometimes you can't pay your mortgage with a credit card. Here are two situations when you'll have to consider other options.
You have the wrong credit card
You need a Discover or Mastercard credit card to process a mortgage payment via Plastiq. American Express and Visa don't permit mortgage payments through the service.
Your card is maxed out
If you're at your credit limit or getting close, you won't be able to charge your mortgage payment. Remember that your credit score will take a hit if you use too much of your available credit. Many financial experts advise keeping your credit utilization ratio below 30% to avoid damaging your credit score.
TIME Stamp: You can pay your mortgage with a credit card, but should you?
Using a credit card to pay your mortgage can be a tempting way to collect rewards and welcome bonuses. It can also help you manage a temporary financial setback while avoiding late fees and penalties. Still, it's essential to consider how it will affect your overall financial situation.
For example, if you charge your mortgage payment and can't pay off your next credit card bill, you shift your low-interest mortgage debt to a high-interest credit card. This situation can increase your monthly expenses and make it harder to stay (or get back) on financial track.
What's more, your credit score can take a hit if your credit utilization ratio is too high. Lower credit scores make it difficult to get the best rates and terms on credit cards, loans, and even cellphone contracts, which can also add to your monthly expenses.
Before paying your mortgage with a credit card, consider the costs to ensure the choice makes financial sense. And, most importantly, be sure you have cash in the bank to pay off your next credit card bill. That way, you can stay on track financially and take full advantage of credit card rewards or a welcome bonus.
Frequently asked questions (FAQs)
Can I earn rewards by paying my mortgage with a credit card?
Yes, you can earn rewards by using your credit card to make a mortgage payment. However, it's important to note that third-party payment-processing fees could erase any rewards you earn. For example, you might earn 2% cash back on credit card purchases, but the fee may be 2.9%—meaning you'll lose money. If your sole reason for paying your mortgage with a credit card is to score rewards, crunch the numbers to ensure you'll come out ahead.
Can I pay my mortgage online?
Most mortgage lenders and servicers let you pay your mortgage via an online portal or mobile app. This option can be an easy way to keep track of your mortgage and ensure you make on-time payments each month. Just be sure you have enough money in your account to cover the payment on the due date.
What other ways are there to pay for a mortgage?
Your mortgage lender or servicer may offer several ways to pay, including online, over the phone, or via automated withdrawals from your checking or savings account. You can also pay your mortgage in person (if your lender or servicer is local) or via mail with a check. If you mail a check, remember that delays are common, especially during bad weather and the winter holiday season, and plan accordingly.
You might also be able to pay your mortgage with a nonbank payment app such as Monarch Money, Cash App, or PayPal. However, like using a credit card, the processing fees can be considerable, so it's best to use this option only in a financial pinch.
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