At one point in time, homeowners had multiple services available that allowed them to pay mortgages with credit cards. In more recent days, however, many homeowners seek to use their rewards credit cards for major purchases and household bills as a strategy to boost their points and miles. There are several reasons that can lead you to wonder whether it’s possible to pay a mortgage with a credit card or not. Read on to learn more about the possibilities, the potential problems, and how to complete the transaction.
Can You Pay Your Mortgage With a Credit Card?
If you’re wondering, “Can I pay my mortgage with a credit card?” the short answer is this: Maybe. To determine whether or not this is a possibility, it’s wise to simply check with your lender. Most lenders don’t offer the option to make a mortgage payment using a credit card. If your lender doesn’t allow credit card payments, there are some other options. For example, Tio (formerly ChargeSmart) enables credit card mortgage payments as a third-party processor. Some borrowers explore using Western Union (and paying for the Western Union transfer using the credit card), using a credit card to buy a money order to pay the mortgage, or using a credit card to take out a cash advance that’ll cover their mortgage payment.
Should I Pay my Mortgage With a Credit Card?
Although it’s tempting to use your credit card to pay your mortgage and take advantage of the extra earned points, there are several factors to consider. For starters, there is the fear that borrowers will end up getting deeper into debt or risk identity theft. If you’re struggling financially, paying your mortgage with a credit card can offer a stopgap in your budget. But if you don’t (or can’t) pay the amount you charge in full every month, it can increase your credit card debt and add interest on your mortgage. Other potential downsides to consider include:
- Will the charge go through as a cash advance? Most credit card companies charge a minimum flat fee or a percentage of a cash advance. A cash advance is when you use a credit card like an ATM card and take out cash. For example, it’s possible you can use your credit card to pay your $1,000 mortgage payment, but if that payment goes through as a cash advance, you’ll be looking at a fee. Generally the APR for a cash advance is much higher than the APR for purchases, and interest begins the date of the transaction, with no grace period provided. Also, rewards points aren’t earned on cash advances. This is a very important factor to consider when weighing your options, so you will want to contact your card issuer and review your Cardholder Agreement to know the rates and fees you will be charged.
- Does your lender charge a transaction fee? Because most businesses pay fees to accept credit card payments, increasing numbers of companies also charge extra fees if you use a credit card to make your payment.
- Will the interest and fees cancel out any rewards or points that you earn? In many cases, using a credit card to make a mortgage payment doesn’t end up being worth it once you take all the fees into consideration because they offset whatever rewards you earned. If the total amount of fees and higher interest rate are more than the value of the rewards points earned, it doesn’t make sense to use this approach since the value of the rewards wouldn’t offset the fees incurred.
How to Pay a Mortgage with a Credit Card
Although it’s not feasible to pay a mortgage with a credit card 100% of the time, the process is fairly simple. To get started:
- Contact your lender and verify that it accepts credit card payments.
- Ask your lender how the payment is processed and ask about all applicable fees they charge.
- Review your Cardholder Agreement and contact your card issuer to review the fees you will incur.
- Schedule the payment.
- Pay off the amount charged to your credit card before your credit card payment’s due date.