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As one of the most costly expenses in your budget, paying your mortgage with a credit card can help to quickly rack up credit card rewards. Your line of credit may also come in handy if you’re in a tight spot and need some extra flexibility with your mortgage payment. If you’re not careful, though, it can also create a slippery slope toward high-interest debt.
Making mortgage payments with a credit card is possible, but — considering the risks and extra steps required — it’s probably not worth it for many homeowners. Here’s all the info you need to decide for yourself.
Can you pay your mortgage with a credit card?
Mortgage lenders don’t usually accept credit card payments directly. Instead, they require homebuyers to set up payments using account and routing numbers from their bank.
For example, if you take out a mortgage loan with Ally Bank, you’ll have the following options for making payments: one-time online payment using bank account and routing numbers, automated monthly payments using bank account and routing numbers, payment by phone, and by mail. On its website, Ally specifies: “Keep in mind, you won’t be able to pay with a credit card.”
Chase also doesn’t offer credit cards as a standard form of payment for mortgage loans. The bank outlines different payment options for homebuyers, which include automatic payments from your checking account, online payments from a non-Chase bank account, online payments from a Chase checking or savings account, check, money order, and phone payments using bank account and routing numbers.
Without access to direct payments, you’ll need to take some additional steps to actually submit a mortgage payment with your credit card.
How to pay your mortgage with a credit card
You will need to plan ahead if you want to pay your mortgage lender via credit card — and, more importantly, assess whether the potential cost is worth any benefit.
Use Plastiq
Plastiq is a third-party payment service that allows you to make mortgage payments with your credit card. There are alternatives to Plastiq designed to help you submit payments to merchants that don’t normally accept card payments, but they’re largely targeted to small business owners (like Melio) or don’t work with mortgages specifically (such as Bilt Rewards).
Plastiq does have some restrictions that could complicate your payment:
Type of credit card
Plastiq only allows mortgage payments with a credit card issued on the Discover or Mastercard networks. Discover issues its own credit cards, like the Discover it® Cash Back, over its network. You can find Mastercard credit cards, meanwhile, from a number of issuers — such as the Citi Custom Cash® Card or Capital One Quicksilver Cash Rewards Credit Card.
If you have a Visa or American Express credit card, you won’t be able to use it for your mortgage payment.
Fees
Plastiq charges a 2.9% fee per transaction made with a credit card. You’ll also have to pay a delivery fee, which can vary depending on the form of payment issued to your mortgage lender (ACH bank transfers, for example, are $0.99).
If you decide to use Plastiq, also make sure you allow for enough time between your transaction and when your balance is due. You don’t want to risk a late payment because of processing time between the different parties (Plastiq, your credit card network, your mortgage lender, etc.).
Stay away from riskier options
If you’re determined to pay your mortgage with a credit card, using a service like Plastiq is probably the simplest way. More expensive — and riskier — payment methods are possible, but they can leave you in a worse financial situation than you began.
For example, you could potentially take out a cash advance on your credit line and use it to pay your mortgage. This has expensive consequences, however. Not only will you pay a cash advance fee, but also you’ll start accruing high interest charges (often up to 29.99% APR) on the advance — without the grace period allowed for normal card transactions. In nearly every situation, cash advances should be a last resort.
Why pay your mortgage with a credit card?
Paying your mortgage with a credit card is risky. But it can be tempting depending on your individual circumstances. Here are a few examples of when you may want to use a card for your mortgage payment — and alternatives to consider beforehand.
Avoid paying late
Late mortgage payments often lead to costly late fees and penalties. What’s more, the longer you wait to pay, and the more frequently you make late payments on your loan, the more harm you could do to your credit.
First things first: Reach out to your mortgage lender about your situation before your payment is late. You may be able to work out a resolution directly that can help you avoid using your card altogether.
If you must use a credit card to avoid paying late, it’s imperative that you have the payment on hand when your credit card bill is due. If your credit card payment is late, you’ll take on potential late fees or even a penalty APR from your credit card issuer. And if you can’t pay the balance in full, you’ll start accruing interest at your card’s high APR.
Earn rewards
There’s a good chance your mortgage loan is your biggest monthly expense. For rewards-seekers, it may feel like not charging the payment to your credit card is like leaving money on the table.
Unfortunately, there’s simply not a great option for earning ongoing credit card rewards on your mortgage without also taking on costly fees that wipe out any potential value.
Consider this: If you use Plastiq to process your mortgage payment with a credit card, you’ll incur a 2.9% fee each month. That means you’ll need to get at least 2.9% back in rewards value to make the transaction worthwhile.
Services like Plastiq don’t fall into common credit card rewards categories like groceries or dining. So the most you’ll earn with many cards is 1 point per dollar or 1% cash back. Even the best cash-back credit cards with flat rewards on every purchase max out around 2% cash back (especially limiting to Discover or Mastercard, and outside of some limited-time offers). Consider these cards with some of the highest flat rewards:
Let’s say your monthly mortgage payment is $2,500. Using Plastiq means a $72.50 fee to pay your mortgage with your card. A card earning 1 point per dollar on general purchases will net you 2,500 points on the transaction (worth $25 at a redemption rate of 1 cent per point). A card with 2% cash back on the purchase will earn you $50 back each month. Either way, you’ll pay more from the 2.9% fee than you earn.
Earn a welcome bonus
One instance in which this could make sense is if you want to make a one-time mortgage payment with a new credit card to meet the spending threshold for a sign-up bonus. These spending thresholds can be very high, and if the required amount isn’t within your normal budget, this can help you meet it without risking overspending — as long as you can still pay off the charge when your statement is due.
For example, maybe you need to spend $4,000 within 3 months to earn a bonus worth 80,000 points. If you put your $2,500 mortgage payment on the card for a 2.9% fee for 2 of those months, you’ll pay $145 in fees. But you’ll also meet the spending requirement and net 80,000 points. At a minimum rate of 1 cent per point, that’s worth $800, even after subtracting the cost, you’ll still net $655.
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3 things to keep in mind before paying your mortgage with a credit card
Always prioritize protecting your finances and credit history before taking the risk to make your mortgage payment with a credit card. Here are some more things to consider before you decide.
1. Credit utilization and credit score
Mortgage payments are many American homeowners’ largest monthly expense — more than $2,300 on average, according to data from the National Association of Realtors (NAR). A charge this big could take up a large portion of your available credit, depending on your card’s limit.
This is something you should think about before making your payment, since credit utilization (the amount of credit you’re using compared to the amount you have available) is the second-most important factor in your FICO Score. A good utilization to aim for is under 30%, but the smaller you can keep this ratio, the better.
Utilization may not be an issue if you have a very high credit limit, but keep in mind the other spending you have planned throughout the month as well, and try to keep your balance well under your limit.
2. Potential debt
Despite today’s high mortgage rates, credit card interest rates are almost always going to be higher.
Charging your mortgage payment to your credit card one time when you’re going through extenuating circumstances may not seem like a big deal. But continuing to use your card to avoid late mortgage payments because you don’t have the funds could leave you in a much more precarious financial situation.
Whenever possible, pay off your credit card balance in full when your payment is due so you don’t take on high interest debt.
3. Options for assistance
If you find yourself facing late payments consistently — or you’re so far behind that you’re at risk of foreclosure — consider reaching out to your mortgage lender before adding to your credit card balance. They may be able to work with you on assistance or forbearance options you can qualify for.
Beyond your lender, consider speaking with a housing counselor for advice on your specific situation. The Consumer Financial Protection Bureau has a location-based directory here. You could also reach out to a nonprofit credit counselor for assistance in managing your budget and debts. Find out more about how you can connect with a credit counselor through the CFPB list here.
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