You can pay a mortgage with a credit card – just not directly. Lenders typically prohibit people from paying off debt with more borrowed money because it’s a risky practice that can’t be sustained for long. For all your mortgage provider knows, you might be paying with plastic because you don’t have enough money in your bank account, not because it’s a great opportunity to earn rewards. And if you were to rack up more credit card debt than you can afford, the mortgage payments would stop, too.
So it’s understandable that mortgage servicing companies don’t allow credit card payments. But the fact that homeowners still want to make mortgage payments with a credit card creates an opportunity for other companies to fill the void and facilitate such transactions.
The easiest way to pay your mortgage with a credit card is through a third-party service such as Plastiq. They’ll turn your credit card charge into either an electronic payment or a check, and deliver it to your mortgage provider. But you’ll have to pay a fee to use a service such as Plastiq to pay your mortgage with a credit card. Plastiq charges 2.5% of each transaction.
If you’re earning rewards at the market-average rate of roughly 1% cash back, this is a money-losing proposition. But it could work out if you’re targeting a big initial bonus – say, $400 for spending $3,000 in three months. A 2.5% credit card fee on $3,000 in mortgage payments would amount to just $75, meaning you’d be up $325 overall.
It’s also worth pointing out one other way to pay your mortgage with a credit card, but it’s really only applicable to your final payments. You could transfer your remaining mortgage debt to a 0% balance transfer credit card. Most major credit card companies allow you to transfer home loans to their credit cards. You just have to find a card with a reasonable transfer fee and make sure you can pay off your balance before regular rates take effect. Credit card interest rates are several times higher than mortgage rates, after all.
All of that might be tough to take in. So for your convenience, we’ll summarize the main points below.
Here’s how to pay a mortgage with a credit card:
Use a third-party service. You’ll need a go-between because lenders don’t directly accept mortgage payments by credit card. Plastiq is a popular service that converts credit card charges into a payment method accepted by your lender. A money-sharing service such as Venmo could be an option, too. But lenders aren’t likely to accept this type of payment, and there’s a 3% credit card fee.
Transfer a balance. You shouldn’t do this until you’re in the home stretch and can pay off your remaining balance before the end of a credit card’s 0% introductory period. Nine of the 15 largest credit card companies allow you to transfer mortgage debt to a credit card.
Watch out for fees. Either balance transfer fees or the credit card convenience fees charged by third-party services could throw off the value of paying your mortgage with a credit card for points, miles or cash back.
Interestingly, paying rent with a credit card is much easier than using plastic to pay your mortgage. Many landlords accept credit card payments directly. And if yours doesn’t, there are a variety of services that can help. Not only can you rack up rewards by paying rent with a credit card, but you can also build credit. Some of the same services that facilitate rent payments with credit also make sure the payments are noted on your credit report.