Why should you pay your mortgage using a credit card?
If you don’t already have one, you can use any rewards credit card to pay off your mortgage. These cards help you earn points that can be redeemed for free hotel rooms, flights or even merchandise. These types of credit cards give you points for every purchase you make, so the more you spend, the more points you get. Since you’re probably spending a lot of money on your mortgage, you’ll end up getting a lot of rewards points.
Many people also take advantage of signup bonuses by using a credit card to pay off their mortgage.
Credit card companies want your business, so they will give you extra points if you spend a certain amount within the requested time frame. For example, you can earn 50,000 bonus points if you can spend $4,000 within three months. Assuming your mortgage payment is at least $1,000 or more each month, you can easily make the spending minimums.
Which credit cards can I use?
Your choices could be limited depending on which card you have. For example, Plastiq, one of the services mentioned below, won’t let you use American Express or Visa. Check the terms for your specific credit card to see what you can and can’t do.
Even if you have a few rewards cards, make a plan for how you want to use the points. It doesn’t make sense to earn points towards hotel stays if you’re looking to get free flights. If you’re not sure how you want to redeem them, pick a card that’ll give you the most flexibility.
A popular card among travel hackers is the Chase Sapphire Preferred® credit card. You can earn 50,000 points as a signup bonus if you spend $4,000 within the first three months. Every purchase earns you one point per dollar, except on travel and dining, where you earn two. You can also transfer points to rewards programs from major airlines, helping to maximize your points.
Once you choose your credit card of choice, either wait until there’s a huge signup bonus to open the new card or use one you already have. Then choose one of the options below to pay your mortgage.
Will my credit card company allow it?
In order for a payment to go through, your card issuer, mortgage lender and card network all have to allow a mortgage payment to go through. Each one has its own rules and regulations. For example, Visa and MasterCard allows mortgage lenders to accept debit cards. However, Visa doesn’t allow credit cards, only the usage of prepaid cards.
Even if a credit card company gives the OK, some banks forbid using cards.
Well Fargo tends to allow credit cards for mortgage payments as long as their lender accepts it. Bank of America, however, won’t allow cardholders to do so with their credit cards. Your best bet is to find a credit card that can be used to pay your mortgage and a third-party payment service provider that your lender has approved.
Third-party options to pay your mortgage using a credit card
All third-party options may require you to pay a small fee to use their service. It could be worth it, as the price you pay is significantly less than what you would pay for an entire vacation.
Plastiq is an online service that allows you to pay large expenses, such as student loans and mortgages.
If you’re looking for an easy way to meet your minimum spending requirements for a signup bonus, Plastiq is a great choice.
All you need to do is create a free account and connect a credit card (unfortunately, you can’t pay your mortgage using an American Express or a Visa card). You then set up which account you want Plastiq to pay and they’ll initiate a bank transfer or send a paper check to your mortgage company.
Plastiq charges a pretty hefty fee to use their service, up to 2.5% each time. If you do an online search, you may be able to find a referral code to get some fees waived. But even if you do pay the fees, you’re only looking to pay about $125 in fees. For some rewards cards, that’s worth five times that in travel costs. So yes, using Plastiq can be worth it.
A word of warning
Earning rewards can be exciting fun, but you could get into a lot of hot water if you’re not careful. The only way that earning points or miles is ever worth it is if you never carry a balance. If you do, you’re going to end up paying interest, which defeats the purpose of getting free stuff. On top of that, you’re paying interest on top of interest; in other words, you’re paying mortgage and credit card interest. This will get you deeper into debt.
If you’re already in credit card debt, it may be a good idea to hold off using this method.
If you think you’re a responsible credit card user, then go ahead and start paying off your mortgage with a credit card.
The bottom line
Paying your mortgage using a credit card can be a great way to earn lots of rewards points for miles. However, it’s a terrible strategy if you end up carrying a balance or fail to pay your credit card bills. It doesn’t matter how many points you earn, because you’ll be paying credit card and mortgage interest. The idea is to earn free rewards, not to pay for them.
Make sure you do your research and be realistic about your financial savviness before diving in. Once you do, try out one of the options mentioned above and start earning points for free trips.