- Mortgage lenders don’t accept credit card payments directly.
- If you have a Mastercard or Discover card, you may be able to pay your mortgage through a payment processing service called Plastiq for a 2.85% fee.
- Because of the fee, paying your mortgage with a credit card will not be worth it most of the time for most people.
Why Pay Your mortgage with a Credit Card ?
There are four reasons why person might consider making their monthly mortgage payment with a credit card :
- To earn credit card rewards
- To hang onto their cash and bank a couple of extra weeks’ worth of interest
- To buy a couple of extra weeks to pay the mortgage without making a late payment to the mortgage company
- To avoid foreclosure at all costs
These are all valid reasons to pay your mortgage with a credit menu. The first gear three of these reasons might give you a rebuff fiscal edge in the hanker run. The one-fourth could be incredibly destructive. We ’ ll expect at each option in more detail below, but beginning, let ’ s explore the logistics of paying your mortgage with a credit batting order .
Third-Party Payment Services
many creditors, including mortgage lenders, will not accept credit cards to pay off debt. For one, the institution may face a transaction tip from the credit card company. But more significantly, they know that doing therefore would mean letting customers trade one form of debt—a relatively low-interest and sometimes tax-deductible form—for another with higher interest and no tax subtraction. Politicians, regulators, and the news media would have a plain day decrying such a practice .
Enter third-party payment processors. These companies will let you use a credit card to pay about any entity. While the competitive landscape is constantly evolving, the best-known—and apparently only—player that processes mortgage payments is Plastiq, which charges a 2.85 % transaction fee. You might be able to find a referral code on-line that gives you a few hundred dollars in fee-free transactions, but that will only get you sol far—unless you find a way to earn more detached transactions by referring others yourself .
Paying your mortgage with a credit card has some restrictions, evening with Plastiq. The terms and conditions prohibit you from using a Visa or American Express menu to pay your mortgage through Plastiq. Considering that other payment processors have come and gone in the past, Plastiq may not be around forever, or it may not always be an option for making mortgage payments. Mastercard and Discover could stop allowing mortgage payments through the serve all in all. conversely, more options could become available in the future to pay your mortgage with a credit circuit board, possibly with more-competitive fees or newfangled perks .
Should You Pay Your mortgage with a Credit Card ?
Let ’ s walk through each of the four reasons why you might want to pay your mortgage with a credit card and see whether they ’ ra beneficial ideas or not .
To Earn Rewards
credit cards have two independent types of rewards : sign-up bonuses and ongoing rewards. A sign-up bonus might give you $ 300 cash back for spending $ 3,000 in your first three months as a cardholder. Ongoing rewards might give you 2 % back on every purchase, including the purchases you make to earn the sign-up bonus .
Let ’ s say your mortgage requital is $ 1,000. If you incur a 2.85 % tip to make that payment, you ’ rhenium losing $ 28.50. silent, you might be able to come out ahead in one of these scenarios :
- Your credit card offers ongoing cash back (or the equivalent in points or miles) of 3.0% or more on this payment.
- Your credit card company doesn’t categorize the third-party payment processor’s charge as a cash advance. Cash advances generally incur fees and always begin accruing interest immediately. Check your credit card agreement to find out your card’s cash advance rules. Even if everything looks good, you may want to make a small test purchase through the payment processor before making your full mortgage payment to verify that your transaction will be treated as a purchase.
- You’ll earn a sign-up bonus worth more than the processing fee, and you wouldn’t be able to earn the sign-up bonus through your usual spending. This might be the most compelling reason to pay your mortgage once or twice with a credit card.
- You’ll earn some other credit card benefit from the purchase that’s worth more than the fee, and you wouldn’t be able to earn this benefit through your usual spending. Benefits that you might be trying to earn include airline status, hotel status, a free hotel night, or a free airline ticket for a companion.
As of this writing in April 2022, the average credit card interest rate is 19.49 %, more than three times the average mortgage pastime rate of 5.39 % for a 30-year fixed-rate mortgage. If you can ’ t pay your credit card balance in fully by the due date, your card will be a very expensive way to make your mortgage payment .
To Earn Interest
If you don ’ metric ton carry a credit calling card balance, you get an interest-free seemliness period on your purchases. This period lasts around 21 to 25 days starting when your citation batting order statement is issued and ending when your payment is due .
Over the naturally of a year, taking advantage of this grace period by keeping your cash in savings—where it earns interest—until your recognition card due date might earn you a few extra bucks. It ’ s not a bad thing to do with purchases that you were going to make anyhow, deoxyadenosine monophosphate long as you never make a deep requital or carry a symmetry .
The best high-interest savings accounts in 2022 only pay 0.7 % concern annually, however. twenty-five extra days of interest on your mortgage requital at that pace wo n’t put you out ahead after a 2.85 % requital process tip .
To Avoid a deep payment
Your mortgage requital is normally due on the first base of the calendar month. however, many lenders give borrowers until the 15th to make their payment without a late fee. once this seemliness period ends, lenders impose hefty deep charges ( check your statement to see how much ), but a late payment won ’ t actually be reported to the credit agency until it is 30 days past due .
If you need more than the 15-day decorate period to pay your mortgage but want to avoid a former fee and credit seduce damage, you could pay your mortgage with a credit poster on the 14th to buy yourself about 25 more days to make your mortgage payment, assuming you ‘re not carrying a libra on your tease.
You could come out ahead if the payment processor ’ mho tip is less than your lender ’ second recently fee and if you pay off your accredit batting order balance in full by the due date. If you don ’ t, you could end up in worse fiscal circumstances by paying credit tease interest, depending on how long it takes you to repay what you owe .
To Avoid foreclosure
An extension of the theme above is to pay your mortgage with a credit circuit board to avoid foreclosure. It ’ s apprehensible to want to do anything possible to remain in your home. however, if you ’ re so far behind on your mortgage payments that you ’ rhenium facing foreclosure—a process that your lender can ’ thymine broach until anywhere from three to six months after your belated payment, depending on the country where you live—your fiscal circumstances are credibly so tenuous that adding credit circuit board debt to your problems is not in your best interest. Talking to your lender and a house counselor about a design to avoid foreclosure, possibly through a lend change, is probably a better idea .
final tip : Consider Your Credit use
Another component to consider is the effect of credit card mortgage payments on your accredit utilization proportion, the share of your recognition line that you ’ re using when your argument is issued. According to FICO, which generates the credit scores that most major lenders use, recognition use accounts for 30 % of your credit score. If you don ’ deoxythymidine monophosphate want the fact that you ’ re paying your mortgage via credit card to affect your citation grudge, you will need to pay off your balance before your instruction is even issued—not just before your affirmation due date .
That said, if you have a high accredit line and only use a little share of it—say, less than 10 % —then you don ’ t need to worry about paying your balance before your instruction comes out. Such a low credit utilization proportion is improbable to harm your score .
An model of Paying Your mortgage with a Credit Card
After reading a headline like “ How We Earned $ 2,000 in Credit Card Rewards Paying Off Our mortgage, ” who wouldn ’ metric ton want to pay their mortgage with a credit card ? It ’ s a truthful fib that personal finance blogger Holly Johnson pulled off—and she used the rewards to help fund a Mediterranean cruise for her class of four .
however, she was only able to achieve it because her platform as a high-profile blogger allowed her to earn thousands of dollars in free Plastiq transactions by referring her readers to the overhaul. Most of us can ’ t do that .
still, if you have excellent credit, you ‘ll find many opportunities to earn significant credit circuit board sign-up bonuses. All you have to do is spend a certain come within three months of being approved for the batting order.
Can You Pay Your Mortgage With a Credit Card?
Yes, but it ’ s not normally a good idea. Third-party payment providers may accept your wag payment and then cut a determine to your mortgage servicer, but the public toilet fee you ‘ll pay may not be worth it. One deciding component in using a credit rating card to pay a mortgage is having a large-enough credit line to absorb your housing payment on top of any other expenses you typically charge to your card. Another is the prize of any likely credit rating card rewards you might earn. Unless you ‘re chasing a sign-up bonus, these probably wo n’t be higher than the appliance fees .
When Does it Make Sense to Charge Your Mortgage to a Credit Card?
It can make feel to charge your mortgage payment to a credit poster when the value of any recognition tease rewards—cash binding, points, or airline miles—is greater than the cost of the transaction convenience fee .
What Are the Downsides of Using a Credit Card to Pay Your Mortgage?
The price of the appliance fee is the most immediate downside of using a recognition card to pay your mortgage. Another issue, much overlooked, is that paying your mortgage with a credit card can dramatically increase your credit use and hurt your credit score. Most important, credit cards normally have higher interest rates than mortgages. If you charge your mortgage to your citation card, then carry a recognition calling card balance from calendar month to month, you ‘ll efficaciously make your mortgage payments much more expensive than they need to be .
Can I Pay My Mortgage Online?
It ‘s common these days for mortgage servicers to accept on-line payments immediately through their websites. Check your mortgage statement for the ship’s company ‘s official web site. then, cross-file for an on-line report and connect your checking account. Make sure to enroll several days before your payment is due since it may take that long for your accounts to link up. Once the sign-up serve is complete, you ‘ll be able to schedule your payment. alternatively, your checking account may offer an on-line bill-pay service that you can use to pay your mortgage. Make certain to find out how far in advance you need to schedule your payment for your loan servicer to receive it on time.
The Bottom Line
only under limited circumstances will the average person potentially benefit from charging mortgage payments to a accredit card. First, you ’ ll need to find a third-party requital processor that lets you use your recognition card to pay your mortgage company. Second, you ’ ll need to earn credit poster rewards that exceed the payment processing tip. Third, you ’ ll need to pay your credit wag balance in wide, ideally even before your statement is issued, to avoid paying interest and possibly hurting your credit score. If you can do all of these things, then paying your mortgage with a citation card might pay off .