Can you pay your mortgage with a credit card?
Yes, it is possible.
The real question is should you make a mortgage payment with a credit card?
The answer is probably not.
While it’s possible and there are extenuating circumstances that may make it ‘okay,’ it shouldn’t be something you do regularly.
Here’s why.
When can you Pay a mortgage with a Credit Card?
Most lenders don’t accept credit card payments for a mortgage payment. To make your payment, you must use a service like Plastiq, a payment processing service. They charge a fee of 2.85% of the payment, which is why it doesn’t make sense to make a mortgage payment with a credit card unless it’s an emergency.
Why would people consider using a credit card to pay their mortgage?
Here are a few reasons:
- Borrowers who have a reward credit card that pays back more than they’d pay for the third-party service to process the payment may make out on the deal
- Borrowers who need the "grace period" to come up with the mortgage payment can make their payment on time while having a couple of weeks to pay the credit card bill
· Sometimes borrowers have no other funds, and a credit card payment keeps them out of foreclosure
How to Pay Mortgage with Credit Card
If it makes sense to pay your mortgage with a credit card, here are the ways you can make it happen.
Third-party payment processors
The most common third-party payment processor to pay your mortgage with a credit card is Plastiq.com. They charge a fee of 2.85% of the transaction, though, so make sure it’s worth it if you’re making a mortgage payment with a credit card for the rewards.
Plastiq only accepts Discover cards, some Mastercards, and JCB International cards. You can’t use American Express or Visa to pay your mortgage.
Use a Prepaid Card to Buy a Money Order
There’s a simple workaround to the rule of no credit cards to pay your mortgage. Since most lenders accept money orders, you can use your credit card to buy prepaid Visa gift cards. You can then use those gift cards to buy a money order to pay for your mortgage. This is the one way to pay your mortgage with a credit card without a fee, although it might cost you to get a money order.
Before you choose this option, make sure the store you’re buying your money order at allows you to use prepaid Visa gift cards to buy a money order. Some do and some don’t, it’s usually hit or miss.
Most credit card companies, however, won’t pay you rewards for buying gift cards, so don’t use this method if you’re strictly in it for the rewards.
The Advantages of Making a Mortgage Payment with a Credit Card
While making a mortgage payment with a credit card is mostly frowned upon and/or expensive, there can be some benefits.
- You might earn rewards. If you have a great rewards credit card, you might come out ahead making your mortgage payment with your credit card. Just make sure you pay the balance off in full each month, so you don’t pay interest on top of the fees already charged for services like Plastiq.
- You might avoid late fees. If you weren’t able to make your mortgage payment on time, charging it can buy you extra time and help you avoid lender late fees.
- You can build more credit. If you make your credit card payment and your mortgage payment on time, you’ll increase the chances of a higher credit score.
The Disadvantages of Making a Mortgage Payment with a Credit Card
Just as there are good sides to making a mortgage payment with a credit card, there are downsides too, including:
- It can be complicated – Most mortgage lenders don’t accept credit card payments so you have to get creative, which can be time-consuming.
- There will be a buildup of interest. If you don’t pay your credit card off in full, interest will accrue, making your mortgage payment cost even more.
- There are high fees involved. The fee to use Plastiq is quite high, which can negate the benefits of using a credit card to pay your mortgage.
Conclusion
You can pay your mortgage without a credit card but it’s not easy or cheap. Even if you buy a money order using gift cards you bought with your credit card, there’s a fee for the money order. If you aren’t careful, using your credit card to make your mortgage payment can be more costly than if you made the payment late and/or worked out an arrangement with your lender.
