Can I Pay My Mortgage With A Credit Card

Dated: 02/06/2018

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Whether your funds are tight or you're all about those credit card rewards points, you've probably wondered: "Can I pay my mortgage with a credit card?" The short answer is yes, but financial experts advise against it.

Charging your monthly home payment has more drawbacks than advantages. For some homeowners, it can seem like a last-ditch effort to avoid a late payment. But if you're not careful, you can wade into a world of debt thanks to convenience fees and interest rates charged against your balance. Below we discuss everything you should know about charging your mortgage payment to your credit card, including the one scenario in which it makes sense.

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Not all lenders accept direct credit card payments

Every mortgage lender has different guidelines about accepting mortgage payments by credit card, and many don't accept direct payment. The reason is simple: They have no incentive to do so, says Adam Jusko, founder and CEO of ProudMoney.com, an online personal finance portal.

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"Most merchants have an incentive to accept credit cards—even with the transaction fee—because they know you're likely to spend more than you would if you paid in cash," he explains. "They figure they'll make up the fee in extra sales and profit. Your mortgage company doesn’t have this incentive. You aren’t going to buy 'more mortgage.'"

You'll end up paying more when you pay with a credit card

Where does this leave you if you do, in fact, want to pay your mortgage with a credit card? You may need to go through a third party to process your payment—which will cost you. Expect to pay a "convenience" fee that's at least 2% of your payment amount, says Jusko. On a mortgage payment of $1,000, for example, you’d pay an extra $20 to $30 to pay by credit card. This adds up fast.

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Even if your lender will accept direct payment, you'll always end up paying more in interest. Pay your monthly home payment with plastic and "you're essentially paying five times the interest," says Spencer Chambers, owner of the Chambers Organization in Newport Beach, CA. "You're not only paying interest on your home mortgage, but also the interest on the credit card. Combining the two, you are likely at around 25% in interest," Chambers says.

Can I pay my mortgage with a credit card to get points?

There are certain situations where paying your mortgage with a credit card seems downright savvy. Say you've just been approved for a credit card which has a bonus opportunity of 50,000 points (worth as much as $750) if you spend $4,000 within the first three months.

"For many people, it’s difficult to spend $4,000 that fast," says Jusko. "Putting your mortgage payment on the card might do the trick."

In that case, you may be willing to swallow extra fees in order to get those bonus points. But usually, perks and points aren't worth it.

"You’ll almost never find a credit card that has rewards worth more than the transaction fee," notes Jusko. "The best credit cards will give you a 2% rebate on your purchases, so you won’t likely come out ahead."

Every once in a while, your credit card could save the day

Let us preface this by saying that the only scenario in which charging your mortgage payment makes sense is if you're able to pay off your credit card balance immediately, before your bill arrives. That way, you can avoid being charged interest.

But some homeowners will put their mortgage on their credit card to avoid a late payment, which some experts say is beneficial. Let’s say your house payment is about to be 30 days overdue. If so, putting it on a card is worth the trouble and cost, says Corey Vandenberg, a mortgage banker in Lafayette, IN. "A mortgage late payment is very bad on credit, and if a credit card cash advance is the only way, then that’s what needs to be done," he says.

To make paying your mortgage on a credit card worth your while, Jennifer Beeston, vice president of mortgage lending for the mortgage provider Guaranteed Rate Mortgage, advises you make sure:

  • Your mortgage company doesn't charge a fee to take your payment from a credit card.

  • You can pay off the credit card immediately afterward, so you don't pay any interest on your card.

  • Your credit card gives you points.

If none of those applies to you, you're better off not charging your mortgage payment. But if you're in a bind and don't have another choice, go ahead; put your house payment on your card and pay it off as quickly as you can. But don't make payments by plastic a habit.

"It's a quick way to lose your house," Jusko says.

Across the board, putting your mortgage payment on a credit card—and the costs to both your financial health and credit score—simply doesn't make sense.

Written by: Stephanie Booth

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