There are a number of reasons why customers would choose to pay their mortgage using a credit card, at least for the time being. Using your credit card to pay your mortgage may help you buy some time as you recover from a financial setback, and it even gives you the opportunity to spread out a single mortgage payment over many months.
On top of that, putting down a mortgage payment on a credit card might be the key to accruing a slew of points and miles or perhaps receiving a substantial welcome bonus that you wouldn’t otherwise be able to earn via regular spending.
Unfortunately, if you attempt to pay your mortgage using a credit card, you may run into some difficulties. For starters, banks that provide mortgage loans do not enable you to pay a credit card directly, so you’ll have to come up with a creative way to pay your credit card bill.
It’s likely that you’ll run into the next difficulty, which is that, like it or not, the workarounds that allow you to pay a mortgage with a credit card are expensive, and the expenditure may make paying your mortgage with a credit card far less appealing.
Even with the additional costs and processes required, there are a few occasions in which paying your mortgage using a credit card might make complete sense, as seen below: 1.
You Should Use a Credit Card to Pay Your Mortgage When the Situation Calls for It
It is, on the whole, beneficial to pay your mortgage with a credit card if doing so would allow you to receive a credit card welcome bonus that you would not otherwise be able to obtain. Consider for a second if you wanted to apply for a credit card that offered a welcome bonus of 60,000 points after you spent $4,000 on purchases during the first three months of opening the credit card.
Payment of your mortgage with a credit card, even if you pay a tiny proportion in fees, might result in large savings if you don’t regularly have enough items that can be paid with plastic to exceed the threshold.
Additionally, paying your mortgage using a credit card might make sense if you are receiving a greater rate of points than the fees you are paying. Consider the following scenario: you pay your mortgage using a credit card, which results in a 2.5 percent charge, but you have a credit card that gives you a flat 3 percent cashback reward.
This means you could use a credit card to pay both your mortgage and credit card payment each month, avoiding interest charges and pocketing the 0.5 percent return.
As a result of all of this, paying your mortgage using a credit card does not make financial sense if you wish to stretch out your monthly payment or catch up on obligations. Your mortgage is likely to have a low fixed interest rate, but the average interest rate on a credit card is presently above 16 percent, according to recent data.
It is possible to set yourself up for financial ruin by transferring secured debt at an attractive rate to an unprotected credit card that costs a high rate of interest.
For the most part, paying your mortgage with plastic only makes sense if you have enough cash in the bank to cover your credit card account in full every month. In the event that you leave your amount unpaid and the interest begins to accrue, any benefits of paying your mortgage using a credit card will be lost to the wind.
Mortgage Payments with a Credit Card: What You Need to Know
While paying your mortgage with a credit card may seem like a hassle at first, there are several situations in which the additional incentives are well worth it. The question is, how do you pay off your house loan using a credit card. The following are the two primary alternatives you might consider:
Plastiq.com is a useful resource.
Platiq.com is a third-party service that facilitates the payment of a variety of invoices using one’s credit card in return for a 2.85 percent service charge. Plastiq.com used to charge a flat 2.5 percent cost, thus the rise in this price will significantly reduce your profits even more than they already are.
When it comes to paying expenses such as utility bills and contractor payments, you may use practically any credit card with this service. However, there are just a few credit card kinds that can be used to explicitly pay your mortgage using Plastiq.com. So your selections are restricted to Discover, MasterCard, JCB International cards, and Diners Club International credit cards, among other major financial institutions.
You have a number of options for getting ahead. Consider the following scenario: you sign up for a credit card that provides three points for every dollar spent. Assume, as well, that each mile is worth one cent in terms of travel time.
Using this card, you could essentially pay your mortgage via Plastiq.com, receive the equivalent of 3 percent back on your purchase, and pay just 2.85 percent in transaction costs. That’s a little amount of money in terms of incentives, but the arithmetic works out.
While paying 2.85 percent for each payment you make might build up over time, this bill payment service allows you to avoid costs if you invite friends to use their services. Once you have signed up, you will have access to a referral code that you may share with others. When someone uses your code to join up and makes a payment, you’ll earn “fee-free dollars,” which you may use to pay your bills for free on the next billing cycle.
Gift cards may be converted into money orders.
Another alternative is to use your rewards credit card to purchase pin-enabled Visa gift cards, which may subsequently be used to pay for money orders using those gift cards. The majority of individuals may purchase pin-enabled gift cards at their local grocery shop.
Which can be really convenient if you have a grocery store credit card that gives extra points in this area. Using your gift card to buy money orders from banks, grocery stores, Walmart, and other locations where money orders are available is a simple process from there.
It’s possible that your ability to execute this technique will be somewhat location-dependent. In other cases, such as when it comes to the sorts of credit cards that may be used to purchase money orders, your local grocery shop may have a tight regulation. You may also discover (like I did in my area) that the typical grocery store customer service representative couldn’t give a damn about how you pay for your groceries.
You’ll also want to consider how you’ll utilize the money orders to pay your mortgage, and this is a very crucial consideration. If you reside in close proximity to a physical and mortar location of the bank that owns your mortgage (such as Chase or Wells Fargo), you might make your mortgage payment using money orders by visiting your bank in person.
However, this is not recommended. However, if you are required to submit your money orders to your mortgage lender, you may want to reconsider your decision.
It is possible to save your money order receipt and request a replacement in the majority of circumstances if your money order is lost in the mail, but this will require additional processes and may incur additional expenses. Not only that, but if your money order is misplaced, your mortgage payment may be late, which might result in even more trouble for you and your family.
The bottom line is as follows:
Before you opt to pay your mortgage using a credit card, be sure you are aware of all of the costs and additional labor that will be required. Generally speaking, you should only consider this choice if you have enough cash in your bank account to pay off your credit card in full right away. In addition, you should only use a credit card to pay for your mortgage if the costs you incur are far less than the value you get in exchange for doing so.
In addition, examine if your time and energy may be better spent somewhere else. When it comes to earning extra benefits over time, paying your mortgage with a credit card is just one of the numerous options available to you. We recommend that you check to see if any of your other payments may be paid using a credit card without incurring additional costs.
When paying for health insurance or childcare, for example, you may discover that you may use your credit card without incurring any additional fees. Check to see whether you may use your credit card to pay for things like energy bills, college tuition, contractors you’re working with, and any other payments you have to pay on a regular basis.
At the end of the day, using a credit card to pay for your mortgage may make sense, but don’t forget about all the other ways you may earn points. With a little imagination and a few credit card sign-up incentives, you might be earning points and miles for years to come.
Meet Krishnaprasath Krishnamoorthy, a finance content writer with a wealth of knowledge and experience in the insurance, mortgage, taxation, law, and real estate industries.