Can You Pay a Mortgage With a Credit Card?

SmartAsset: Can You Pay a Mortgage With a Credit Card?

Mortgage payments are one of the biggest bills that most households pay each month. Some credit cards offer tremendous rewards and perks based on how much you spend on them. Because of that, it makes sense to wonder if you can pay a mortgage with a credit card to earn valuable miles, points, and cash back. In this article, you’ll learn about mortgage payment options, if you can pay with a credit card, and alternative options to consider.

A financial advisor could help you create a financial plan for your home buying needs and goals.

Standard Mortgage Payment Options

Traditionally, borrowers paid their mortgages every month with cash or a check. As technology advanced, additional payment options became available. Here are seven standard mortgage payment options available from most lenders:

Check (mailed or in-person)
Cash payments in-person (e.g. at a bank branch)
Money orders or cashier checks (mailed or in-person)
Online bill payment from your bank
ACH by your mortgage lender
Over the phone payment
Wire transfer

Most banks do not allow borrowers to pay their mortgage with a credit card. The primary reason is that credit card processing fees are up to 3% or more for each transaction. After deducting the fee, the lender could be losing money on every mortgage payment made with a credit card.

Additionally, not all credit card issuers, like American Express, Mastercard and Visa allow cardholders to pay their mortgages directly. Instead, you’ll need to go through a third-party platform to make a mortgage payment with your credit card. Here are three options:

Indirect methods of paying your mortgage with a credit card. Two of the most popular ways to make mortgage payments with a credit card are buying money orders and using a service like Plastiq.

Buying a gift card and converting it to a money order. Some borrowers buy Visa or Mastercard gift cards with their credit cards. Then, they’ll use those gift cards to buy money orders to make their mortgage payment. With this option, there are generally fees for buying the gift card, plus additional fees to purchase the money order.

Third-party payment services. These services will make your mortgage payment on your behalf via check or ACH transfer. However, not all types of credit cards can be used to pay your mortgage. For example, Plastiq doesn’t allow mortgage payments with American Express cards. Additionally, these services charge a fee for the service that is often much greater than the value of the rewards earned on the transaction.

Why Pay Your Mortgage With a Credit Card?

Here are four reasons why homeowners may be consider paying their mortgage with a credit card:

Get miles, points, or cash back. Many credit cards offer valuable rewards when making purchases. Since a mortgage is one of the largest monthly expenses for most households, this is a big opportunity to maximize your rewards. However, when you pay your mortgage with a credit card, the fees are typically higher than the rewards earned. Because of that, this strategy makes the most sense when you are trying to earn a welcome bonus or additional benefits, like elite status, a companion pass, or free hotel night certificates.

Earn interest on your money. When you pay your mortgage with a credit card, you’ll receive extra time to pay the bill. Generally, credit cards provide up to 25 days of interest-free borrowing if you pay your statement balance in full each month. For people with uneven income or that are waiting for a large payment to arrive, this extra time may be worth the additional fees of using a credit card.

Keep your loan current. Your payment history is the largest factor in your credit score. If you’re in danger of falling behind on your mortgage and having a late payment negatively impact your score, it may make sense to use a credit card to pay your mortgage. This strategy should be reserved for people facing a temporary situation. Otherwise, you face the possibility of needing to use your credit card every month if you can’t catch up and bring your payments current.

Avoid foreclosure. For people that are on the verge of foreclosure, paying a mortgage with a credit card can be a last-ditch effort to save their home. While this can delay the foreclosure, you should consider working with a credit counseling service to create a financial plan. It is also a good idea to speak with a bankruptcy attorney to understand your rights and obligations.

Bottom Line

There are times when paying a mortgage with your credit card can make sense. If you can earn more rewards than the cost of using a third-party processing service, that’s a good option. Additionally, you may use a credit card when you can’t make the payment or you’re in danger of being foreclosed upon. However, for the average homeowner, using a credit card may not make sense given the higher cost of using these services.

Tips for Paying Your Mortgage

A financial advisor could help you put a financial plan in action for your home buying needs. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Use SmartAsset’s mortgage comparison tool to compare mortgage rates from top lenders and find the one that best suits your needs.
The best way to ensure that you can pay your mortgage every month is to keep your mortgage payment small. You can do this by buying a smaller home, finding a lower rate, or making a larger down payment. SmartAsset’s free mortgage calculator will help you figure out what the payment may be in different scenarios.