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Another hurdle is that of the major credit card networks—Visa, Mastercard, American Express and Discover—only Mastercard allows you to charge mortgage payments to your account. In addition, your credit card issuer may have rules preventing mortgage payments from being charged to your credit card account. In the face of these roadblocks, how do you pay your mortgage with a credit card?
You may be able to pay your mortgage company directly, but your credit card company, the card network, and your mortgage lender must all allow credit card payments for this purpose. Another strategy is to use a third-party payment service like Plastiq. Sure, you can pay for your mortgage with a credit card, but is that a wise move? There are a few reasons you might want to pay your mortgage with a credit card. Before utilizing this payment method, weigh the transaction fees against any rewards you might earn.
Another factor to consider is the effect of credit-card mortgage payments on your credit utilization ratio. However, she was only able to achieve it because her platform as a high-profile blogger allowed her to earn thousands of dollars in free Plastiq transactions by referring her readers to the service. If you can do all these things, paying your mortgage with a credit card might pay off. Yes, though it's not always a good idea from a financial standpoint.
There are third party payment providers that essentially accept card payments and then cut a check and mail the funds to the mortgage provider but they too charge a fee for their service. The deciding factors in using a credit card to pay a mortgage include having a large enough credit line to absorb such a large transaction in addition to any other spending that might go on the card and the value of any potential rewards being earned being higher than the convenience fees charged to make the transaction.
If the timing is such that you can't mail in your monthly payment then it can be worth the cost of a convenience fee to avoid making a late payment, as late payments will show up on your credit report and have a significantly negative effect on your credit score. Another scenario where it can make sense is if the value of any credit card rewards in the form of cash back, points or airline miles is greater than the cost of the transaction convenience fee. The cost of the convenience fee is probably the biggest downside of using a credit card to pay your mortgage but another, often overlooked, issue is that it can dramatically increase your credit utilization level.
As credit utilization grows credit scores can decrease accordingly. CNET Average cash advance interest rate for Accessed September 28, Investopedia average credit card interest rate.
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The more credit card debt you have, the more difficult it is to keep up with your expenses once you add a mortgage into the mix. If you were to knock out your credit card balance before finalizing that loan, you'd have an easier time absorbing that higher housing expense. If you're eager to rid yourself of credit card debt before buying a home, the first thing to do is assess your debt and see where it's coming from.
If you owe money on three separate cards, figure out which one charges the most interest and tackle that balance first. Another option is to consolidate your debt , which could help lower the interest rates you'll pay. This can be done via a balance transfer or even a personal loan. Of course, you'll also need to get on a tight budget and cut back on spending to carve out money to pay off your debt. And you may want to consider getting a side job temporarily to make decent progress on the debt payoff front.
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