There are a few reasons consumers might want to pay their mortgage with a credit card—at least for a while. In times of financial hardship, paying a mortgage with a credit card can help you buy some time, and even give you the option to pay off a single mortgage payment over several months.
Not only that, but paying a mortgage with a credit card can be the ticket to racking up a ton of rewards—or even earning a sizable welcome bonus that you couldn’t normally earn via regular spending.
Unfortunately, you’ll face a few problems as you try to pay your mortgage with a credit card. First off, banks that offer mortgage loans do not allow you to pay a credit card directly, so you’ll have to find a workaround.
The next problem you’ll face is that, like it or not, the workarounds that let you pay a mortgage with a credit card cost money, and the expense can make paying your mortgage with a credit card considerably less attractive.
With that being said, there are a few instances where it can absolutely make sense to pay your mortgage with a credit card, even if some added fees and steps are involved.
When It Make Sense to Pay Your Mortgage with a Credit Card
For the most part, it does make sense to pay your mortgage with a credit card when you’re pursuing a credit card welcome bonus you couldn’t earn otherwise. Imagine for a moment that you wanted to apply for a credit card which offers a welcome bonus of 60,000 points after you spend $4,000 in the first 3 months of opening the card. If you don’t normally have enough expenses you can pay with plastic to reach the threshold, paying your mortgage with a credit card can leave you significantly ahead—even if you pay a small percentage in fees to do so.
It can also make sense to pay your mortgage with a credit card if you’re earning a higher rate of rewards than the fees you’re paying. For example, let’s say paying your mortgage with a credit card results in 2.5% in fees, but you have a credit card that offers a flat 3% back. In that case, you could pay your mortgage with a credit card, pay your credit card bill in full each month to avoid interest and pocket the 0.5% in rewards.
With all this being said, it doesn’t make sense to pay your mortgage with a credit card if you want to spread out your monthly payment or catch up on bills. Your mortgage likely comes with a low fixed interest rate, whereas the average credit card interest rate is currently over 16%. If you transfer secured debt at a low rate to an unsecured credit card that charges a ton of interest, you are setting yourself up for a financial disaster.
For the most part, it only makes sense to pay your mortgage with plastic if you have the cash in the bank to pay your credit card bill in full each month. If you let your balance linger and the interest starts piling up, any benefit of paying your mortgage with a credit card goes out the window.
How to Pay Your Mortgage with a Credit Card
While paying your mortgage with a credit card can seem like a pain, there are some scenarios where the added rewards are worth it. But, how do you pay your home loan with a credit card? Here are the two main options you could consider:
Use Plastiq.com
Plastiq.com is a third-party service that lets people pay various bills with a credit card in exchange for a 2.85% fee. Not too long ago, the fee to use Plastiq.com was just 2.5%, so this increased fee will absolutely eat away at your returns even more.
While you can use almost any credit card with this service to pay bills like utilities and payments to contractors, there are only a few card types you could use to pay your mortgage specifically with Plastiq.com. These include Discover, Mastercard, JCB International cards and Diners Club International credit cards, so your options are fairly limited.
You could get ahead in several ways. Let’s say you sign up for a card that offers 3 points for each dollar you spend. Let’s also assume that each mile is worth one cent in travel. In this scenario you could effectively pay your mortgage through Plastiq.com with this card, earn the equivalent of 3% back and pay just 2.85% in fees. That’s a tiny bit of rewards to pursue, but the math does work out.
However, you’re much better off using Plastiq.com on a temporary basis to earn a big welcome bonus. As an example, let’s say you sign up a card to earn a welcome bonus of 60,000 points after you spend $4,000 in the first 3 months of opening the card. If you funneled $4,000 in mortgage payments onto this card using Plastiq.com, you would pay $114 in fees. However, you would earn the welcome bonus in the process.
While forking over 2.85% for each payment you make can add up, this bill payment service does let you avoid fees if you refer friends. Once you sign up, you can access a referral code you can share with other people. When someone uses your code to sign up and they make a payment, you’ll earn “fee-free dollars,” which you can use for free bill payment.
Convert Gift Cards into Money Orders
Another option is buying pin-enabled Visa gift cards with your rewards credit card, then using those gift cards to pay for money orders. Most people can buy pin-enabled gift cards at a grocery store, which can make a ton of sense if you have a grocery store credit card that offers bonus points in this category. From there, you can set up your PIN and use your gift card to purchase money orders from banks, a grocery store, Walmart or anywhere else money orders are sold.
Your ability to pull this strategy off may be somewhat location-specific. For example, your local grocery store may have a strict policy when it comes to the types of cards you can use to buy money orders. You may also find (like I do, in my hometown), that your average grocery store customer service person couldn’t care less how you pay.
You’ll also want to think about how you’re going to use the money orders to pay your mortgage, and this part is important. If you live near a brick and mortar branch of the bank that holds your mortgage (like Chase or Wells Fargo), then you could visit your bank in person and pay your mortgage payment with money orders directly. But if you have to mail your money orders to your mortgage lender, you may want to think again.
You can save the receipt for your money order and ask for a replacement in most cases if it’s lost in the mail, but there are added steps and there may be fees involved in doing so. Not only that, but your mortgage payment could be late if your money order winds up lost, which could lead to even more problems.
Bottom Line
Before you decide to pay your mortgage with a credit card, make sure you understand the fees and all the extra work involved. Generally speaking, you should only pursue this option if you have the cash in the bank to pay your credit card in full. You should also only pay your mortgage with a credit card if the fees you pay are considerably less than the benefit you’re getting in return.
Also consider whether your energy could be better spent elsewhere. There are many ways to earn more rewards over time, and paying your mortgage with a credit card is just one of them. We suggest checking whether your other bills can be paid with a credit card without an added fees. For example, you may find you can pay for health insurance or daycare with a credit card without an added charge. Also check whether you can pay utility bills, college tuition, contractors you’re working with and any other bills you pay on a regular basis with a credit card.
At the end of the day, covering your mortgage with a credit card can make sense, but don’t forget all the other ways you can earn rewards. With some creative thinking and a few credit card welcome bonuses, you could be rolling in points and miles for years to come.
