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There are two ways to pay your mortgage with a credit card. Both cost money, time, and effort. So although the option might be tempting since you can earn rewards, it’s not always worth it.
If you want to pay your mortgage with a credit card, make sure you know the risks and costs involved beforehand — and consider other, better strategies first to ease the burden of your monthly payments.
Here’s what you need to know about paying your mortgage with a credit card:
Can you pay your mortgage with a credit card?
Yes, there are a couple of ways to pay your mortgage with a credit card. You can either:
- Use a third-party service like Plastiq
- Use prepaid gift cards to buy money orders
The most important question here, though, isn’t whether it’s possible, but whether it’s a good idea — and why it requires convoluted workarounds.
Why don’t mortgage lenders accept credit card payments directly?
There are several reasons for this:
- Lenders have to pay a fee: When a vendor accepts a credit card payment, they have to pay a fee of around 3% which would likely get passed on to customers. Avoiding that extra cost means lenders can offer lower interest rates and fees.
- Lenders have a financial responsibility to maintain with borrowers: It’s unlikely that a lender would want to allow customers to pay a low-interest mortgage debt with a credit card, which usually has a much higher interest rate. This practice would make it easier for borrowers to accumulate insurmountable debts and could invite unwanted government regulation.
- Payment companies can prohibit certain credit card transactions: Some merchants might be prohibited — or partially restricted — from accepting credit cards for specific transactions. Visa, for instance, bars its merchants from accepting credit cards for most debt repayment in the U.S.
How to make mortgage payments on a credit card
Here are the strategies you may be able to use if you want to pay your mortgage with a credit card.
Use a third-party service
Plastiq is one of the go-to services for paying a mortgage with your credit card — but not all cards are supported. For instance, while Plastiq has relatively few restrictions for Discover and Mastercard users, Visa and American Express credit card holders cannot use the service to make mortgage payments.
If you have an eligible card, all you need to do is open a free Plastiq account. Plastiq will charge your credit card for your mortgage payment — plus a 2.85% fee — then send your mortgage payment via direct deposit or check to your mortgage servicer. Plastiq guarantees your payment will be delivered on time, or they’ll pay your late fees.
How much it costs: 2.85% per transaction (or $2.85 per $100)
Turn gift cards into money orders
To utilize this strategy, here are the steps you’ll need to follow:
- Buy a prepaid debit card
- Use the prepaid debit card to buy a money order
- Use the money order to pay your mortgage
Ideally, you’ll buy your prepaid debit card with a rewards credit card to maximize the value of your purchase.
Once you have a prepaid debit card, use it to buy a money order (you can’t buy a money order with a credit card). You can then use the money order to pay your mortgage.
Money orders often can’t exceed $1,000, which may not be large enough to cover your mortgage, meaning you’ll need to buy multiple money orders.
Reasons to pay your mortgage with a credit card
You might want to pay your mortgage with a credit card to avoid a late payment or foreclosure, secure a credit card welcome bonus, or earn credit card rewards.
Avoiding a late payment fee
If you won’t be able to make your mortgage payment on time, then you may be tempted to put it on a credit card to avoid the late fee and buy yourself a few more weeks to make the payment.
This possibility only exists if you’re not carrying a balance on your credit card. When you pay your balance in full and on time, you won’t be charged interest. If you’re carrying a credit card balance, all new purchases start incurring interest immediately.
Paying your mortgage with a credit card to avoid foreclosure could seriously backfire. Putting additional interest debt on a credit card with 10% to 30% APR may further destabilize your finances, and it could push you not only into foreclosure but also bankruptcy.
If you cannot make your mortgage payments, the best option is to talk to your lender as soon as possible about forbearance, a loan modification, or refinancing.
Credible can help you get started with a mortgage refinance. With Credible, you can check multiple refinance rates from our partner lenders quickly — it’s free, secure, and won’t affect your credit score.
Getting a welcome bonus
Qualifying for a credit card account opening bonus is the most logical reason to pay your mortgage with a credit card. Even then, it only makes sense if you could not meet the minimum spending requirement for the welcome bonus with your typical spending.
Instead, consider earning that bonus during a part of the year when your expenses are naturally higher than usual.
Here are some examples showing how you’d fare trying to earn a credit card welcome bonus when using it specifically for a $1,000 monthly mortgage payment. Each credit card in the example assumes a 1% rewards rate on your total spending.
|Min. spend||Welcome bonus||Cash from rewards rate||Plastiq fee (2.85%)||Profit|
|Card 1||$3,000||$300||1.0%, or $30||$85.50||$244.50|
|Card 2||$4,000||$300||1.0%, or $40||$114.00||$526.00|
The ongoing rewards you can earn from credit card spending are always far less per dollar than the rewards you can earn from a welcome bonus.
Downsides to paying with a credit card
The main downsides of paying a mortgage with a credit card are incurring fees, racking up credit card interest, and potentially affecting your credit score.
Each of the two ways to pay your mortgage with a credit card has fees associated with it. Plastiq’s service costs 2.85% per transaction. The other option may entail prepaid debit card fees and money order fees, plus the cost of your time.
Racking up interest charges
It’s not hard to end up in a situation where the interest charges from paying your mortgage with a credit card outweigh the rewards you earn.
Taking a hit on your credit
Paying your mortgage with your credit card will also increase your credit utilization ratio, which isn’t good for your credit score. It means you’re using a greater percentage of your available credit. Amounts owed is a major component of your credit score, accounting for 30% of your score.
Your credit score may decline if you increase your credit utilization because the more credit you use, the more it looks like you’re at risk of overextending yourself.
|Credit limit||Normal monthly spending||Mortgage payment||Credit utilization|
|Without mortgage payment||$10,000||$2,000||$0||20%|
|With mortgage payment||$10,000||$2,000||$1,000||30%|
Should you pay your mortgage with a credit card?
|More easily earn a sign-up bonus||Extra hassle and fees to deal with|
|Earn extra credit card rewards||Possible interest charges and credit score hit|
You’re most likely to benefit from paying your mortgage with a credit card if you’ve already exhausted simpler options for earning sign-up bonuses.
It also helps if you’re an organized, detail-oriented person who can execute all the steps without making an expensive mistake.
When to consider paying with a credit card
- It’s your only option for earning a valuable welcome bonus
- You’re not carrying any credit card debt
- It’s your only option to avoid a late payment or foreclosure
When to avoid paying with a credit card
- You can earn a welcome bonus through ordinary spending
- You’re already carrying credit card debt
- You’re trying to increase your credit score
Other ways to get a handle on your mortgage payment
If you’re tempted to pay your mortgage with a credit card because you’re falling behind, there are better strategies for catching up on payments:
- Apply for forbearance. Mortgage forbearance can give you a temporary break from making your mortgage payments when you have a financial hardship.
- Get a loan modification. You may be able to work out a loan modification with your lender. Modifying your loan can result in a lower interest rate and/or longer loan term, thus reducing your monthly payment to a more affordable level.
- Reduce other housing expenses. To lower your property tax bill, consider challenging your property tax assessment if you can make a case that it’s too high. An easier way to reduce your monthly housing costs is to shop around for lower homeowners insurance rates or raise your deductible.
- Set up a repayment plan. A repayment plan can help you catch up on late mortgage payments when you’re still able to make your current payments. One way to do this is by spreading out your past-due amount over several months to make it affordable.
- Refinance your mortgage. If you have a government-backed loan (FHA, VA, or USDA), it may be possible to refinance your mortgage even if you don’t have the income and credit score normally needed to qualify for a new loan. If you don’t have a government-backed loan, a conventional refinance could be an option, but these have stricter financial requirements. Refinancing also comes with closing costs.
Credible makes refinancing easy. You can see rates from our partner lenders, gauge the costs of your mortgage, and secure a streamlined pre-approval letter in just a few minutes through our platform. We also provide transparency into lender fees that you won’t often find on other comparison sites.