Paying off your mortgage with a credit card

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If you like to maximize your credit card rewards, then writing a check for your monthly mortgage payment can seem like a huge missed opportunity. Shouldn’t there be a way to pay off your mortgage with a credit card?

It turns out there is. In fact, there are three. The trap ? They all have additional costs, and only one is likely to earn you rewards. Here’s how to pay off your mortgage with a credit card.

How to pay off your mortgage with a credit card

Very few, if any, mortgage lenders will allow you to make a mortgage payment with your credit card. Basically your mortgage is debt, and your credit card is a form of debt too. Banks generally disapprove of using one type of debt to pay off another.

That being said, there are a few potential workarounds, all with varying degrees of difficulty. Whichever you choose, be prepared to pay additional fees.

Use a third-party payment service

Depending on your mortgage lender, the easiest way to pay off your mortgage with a credit card may be to use a third-party payment service. Some traditional lenders will accept them, but others will not, so it’s worth calling ahead.

One of the most popular mortgage payment processors is called Plastiq. The service acts as a kind of payment exchange. You make a credit card payment to Plastiq equal to your mortgage payment (plus their transaction fees). Then, Plastiq sends an electronic payment or paper check to your mortgage lender on your behalf.

You can use these services once or set up automatic payments every month. Fees for third party mortgage payment services vary by provider. Expect to shell out an additional 2-3% of the transaction amount for each monthly payment. For example, Plastiq charges approximately 2.85% per payment. (Occasional discounts or promotions may be available.)

Using a credit card cash advance

There are several ways you can use your credit card to make a mortgage payment without involving a third party, but they are all as expensive, if not more expensive. For example, you can use your credit card to withdraw money from an ATM. This can then be deposited into your bank account or used to purchase a money order.

In some now rare circumstances, you can even use a credit card to directly purchase a money order. However, most retailers have stopped accepting credit cards for money order purchases due to fraud and money laundering issues.

In all cases, the transaction will be considered a cash advance by credit card. Unfortunately, cash advances have a lot of associated costs.

On the one hand, you will pay a cash advance fee. This can be 5% or more of the total you withdraw. Plus, cash advances start earning interest as soon as they are posted, often at a higher interest rate than regular purchases. Remember to check your cash advance limit – it will likely be much lower than your usual credit limit.

Besides fees, you should avoid cash advances if your goal is to earn credit card rewards. Cash advances do not earn any purchase rewards at all. They will also not count towards the expenses required for a credit card sign-up bonus.

Use a balance transfer check

Another way to pay off your mortgage with a credit card is to use a balance transfer check.

The most common credit card balance transfer involves moving a balance from one credit card to another. However, sometimes you can use a balance transfer check to transfer money from your credit card to your bank account.

Some new balance transfer credit cards will ship with paper balance transfer checks. You fill them out like any other paper check and then deposit them into your bank account. You can then use the money to pay off your mortgage.

The balance of a transfer by check is treated the same way as that of a transfer by regular card. This means that you will generally be charged a balance transfer fee. These fees can range from 2% to 5% of the total amount transferred. And, unlike regular purchases, balance transfers start earning interest immediately. The only way to avoid this is to use a credit card with an introductory 0% APR balance transfer offer.

Be sure to check your balance transfer limit with your bank. You might be able to transfer up to your full credit limit, but you might only get half of it. It depends on many factors including your credit history and income.

While a balance transfer check can be useful in a dead end, it’s not ideal for reward maximizers. As with cash advances, balance transfers do not earn credit card purchase rewards. Your balance transfer will also not help you meet a signup bonus spending requirement.

When should you use a credit card to make your monthly mortgage payment?

Despite the potential costs, there are some cases in which it may make sense to pay off your mortgage with a credit card. Here is what they are.

If the rewards outweigh the costs

The main driver for many people who use third party mortgage payment services are credit card rewards. Essentially, if you can earn more rewards than it costs to use the service, you come out on top. If you can pay a 2% fee to earn 3% in rewards, you get a 1% return.

Paying off your mortgage with your rewards credit card could also be helpful in earning signup bonuses. This is especially useful when trying to earn a signup bonus that has a large spending requirement that you wouldn’t be able to meet otherwise. For example, paying $ 75 in processing fees might seem reasonable if it helps you earn $ 1,500 in rewards.

To avoid late payment

In some cases, you may choose to pay off your mortgage with a credit card rather than miss a payment. Since missing a mortgage payment can have a number of negative consequences, including late fees, it may be a good idea to use your credit card in a pinch.

On the plus side, credit cards allow you to carry a balance from month to month. This could help you pay off your mortgage payment over time. However, this is not a sustainable cycle. The additional fees and interest charges will add up each month. If you can’t pay off the balance quickly, you could end up in a worse financial situation than you started with.

Credit cards can be a useful way to pay off your mortgage in some situations. Whether you want to maximize your credit card rewards or avoid paying your mortgage late, be sure to do your research first. The fee and the process can be onerous and more expensive than it’s worth – or it can be perfectly tailored to your situation.


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