Can I Pay My Mortgage With a Credit Card? The answer is yes, though it’s not as easy as you might hope. In this article, you’d get to know exactly how you can do so, then list six great credit cards for paying your mortgage.
Some people facing financial troubles may consider using a credit card to pay their mortgage to avoid a late mortgage payment and stay away from foreclosure.
And it’s much easier and faster to pay your mortgage online with a credit card than to mail a check to your mortgage lender.
Cost of Paying Your Mortgage With a Credit Card
Some lenders who accept credit card payments charge a transaction fee to process the payment. You see, each time you swipe your credit card.
The business accepting that payment has to pay a fee to the credit card issuer, the processing network, and other companies involved in processing the transaction.
Mortgage lenders, or the companies they use to process credit card payments, would pass this 2-3% fee on to you. That increases the cost of paying via credit card.
There are a few third-party companies that let you pay your mortgage with your credit card.
They act as an intermediate, processing your payment and in turn cutting a back to your mortgage lender on your behalf. It gets the job done, but these companies will charge a fee for the service.
Why Pay Your Mortgage With a Credit Card?
The four reasons people might consider making their monthly mortgage payment with a credit card are these:
- To earn credit card rewards
- To hang onto their cash and bank a couple of extra weeks’ worth of interest
- To buy a couple of extra weeks to pay the mortgage without making a late payment to the mortgage company
- To avoid foreclosure at all costs
Should You Pay Your Mortgage With a Credit Card?
If you can navigate the waters to make it possible, paying your mortgage with a credit card is an option, assuming the rewards outweigh the fee. As long as it won’t hurt your credit and your budget, it’s worth considering.
But if you’re already using a large chunk of your credit limit, or if you’re tight on money for bills this month, putting your mortgage on a credit card isn’t the best idea.
It could hurt your credit scores and end up further straining your budget over the long term if you don’t pay your credit card bill off in full.
Avoid Using a Cash Advance to Pay Your Mortgage
While you may be tempted to use a cash advance from your credit card to make your mortgage payment, make sure you’re aware of the risks.
When you use a cash advance, whether it’s an ATM withdrawal or convenience checks from your credit card issuers, you’ll be charged a cash advance fee.
Cash advances also are charged a higher interest rate and do not have a grace period. The lack of a grace period means your balance starts accruing interest right away rather than after your billing statement closing date
The Impact on Your Credit Score
Before you pay your mortgage with a credit card, make sure you have enough available credit to process your mortgage payment and any fees charged. Otherwise, the transaction may be declined and you may face additional fees.
Charging your mortgage payment could raise your credit utilization and impact your credit score. Particularly if you don’t have a high credit limit on your credit card.
Your credit score may recover from points lost due to high credit utilization once you pay your balance down and leave it below 30 percent of your credit limit.
Obstacles to Paying a Mortgage with a Credit Card
It seems that the stars have to align so that you can make a mortgage payment with your credit card. Your card network, your card issuer and your mortgage lender all have to give the green light for a mortgage payment to go through successfully. Each party has its own rules.
For instance, Visa allows mortgage lenders to accept Visa debit and prepaid card payments; MasterCard allows the use of debit and credit cards for mortgage payments.
But some credit card issuers don’t allow mortgage payments. Bank of America credit cards, for instance, cannot be use to pay a mortgage.
Wells Fargo credit card holders may have more luck; their cards can be use to pay a mortgage as long as the mortgage lender accept them.
Of course, not all mortgage lenders do. But they might be more willing to accept your payment if it’s process by a third-party payment service provider.
Factors to Consider When Paying a Mortgage with a Credit Card
- The Cost of Interest
- Effect on Your Credit Scores
It’s only under limited circumstances that the average person might benefit from charging mortgage payments to a credit card. First, you’ll need to find a third-party payment processor that lets you use your credit card to pay your mortgage company.
Second, you’ll need to earn credit card rewards that exceed the payment processing fee. Third, you’ll need to pay your credit card balance in full.
Ideally even before your statement is issued, not only to avoid paying interest. But also to avoid affecting your credit utilization ratio and possibly hurting your credit score.
If you can do all these things, paying your mortgage with a credit card might pay off.
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