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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: PM Images/Stone/Getty Images March 28, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Bankrate logo The Bankrate promise
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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. You’ll need to investigate with your institutions to see if this is possible. There’s a good chance it isn’t. Another strategy is to use a third-party payment service like . However, you’ll be subject to a hefty fee of 2.85 percent of your mortgage payment amount. Since the third-party company sends your mortgage company the funds via check, wire transfer or ACH transfer, you don’t need approval from your lender. Keep in mind, though, it could take up to eight business days for your mortgage company to get their payment, so you’ll need to plan ahead if you choose this payment route. Reasons to pay your mortgage with a credit card
Sure, you can pay for your mortgage with a credit card, but is that a wise move? Let’s review the main reasons to consider this path, along with some related factors: Earning credit card rewards
A mortgage payment is a big lump sum, and if you’re interested in , it’s tempting to try and charge it. Before using this payment method, though, weigh the transaction fees against any rewards you might earn. For instance, if you get 2 percent cash back on the transaction, you’d earn $40 by paying a $2,000 mortgage payment. But, if you use Plastiq and have to pay its attendant 2.85 percent transaction fee, $57 in this case, you’d actually be down $17. In this scenario, the cost outweighs the benefit, so it’s not worth it. You also need to be sure you can . Paying added credit card interest on your mortgage payment will quickly wipe out any reward benefits. Meeting a sign-up bonus spend requirement
Under the right circumstances, it may make sense to pay your mortgage with a credit card to help reach the minimum spend requirement to garner a . For example, say you want to take advantage of the welcome bonus for the . Under Southwest’s current promotion, you can earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months. By paying your $2,000 mortgage using Plastiq, you’ll earn the bonus–with points worth approximately $750 (based on TPG’s 1.5 cent point value) minus Plastiq’s 2.85 percent transaction fee ($57). Similar to earning credit card rewards, charging your mortgage payment to your credit card for a sign-up bonus only works if you can pay off your credit card bill in full each month. Otherwise, high interest charges will quickly overtake the value of your rewards and potentially lead to mounting credit card debt. Avoiding a late payment or delaying foreclosure
If you’re facing a temporary cash-flow problem, you may be looking to avoid a late payment fee by charging the monthly mortgage bill to your credit card. As a one-time occurrence, charging your payment may be the best option, but only if you can pay the total credit card balance before the due date to charges and falling deeper into debt. You’d still have to pay the transaction fee, but it could be worth it if it prevents you from receiving a negative late payment mark on your credit report. However, if you’re charging your mortgage to your card without a plan to pay it off or are facing the same issue every month, you may find yourself in an ever-worsening cycle of debt. Why you shouldn t pay your mortgage loan with a credit card
As with many financial practices, it’s worthwhile to do a benefit-risk assessment. Do the benefits outweigh the risks or vice-versa? Risk of a debt cycle
If you can’t pay your credit card bill in full and avoid interest charges, you run the very real risk of falling further into debt. The current is over 16 percent. The long-term expense of paying higher interest rates can add up quickly and negate any benefits you gain by charging your mortgage loan payment. The longer you go without repaying the charge for your mortgage payment, the harder it becomes to pay your credit issuer. What’s more, getting caught in a cycle of debt leaves you vulnerable to that lure consumers in this situation into taking short-term loans at exorbitant interest rates. Costly fees
If you use a third-party payment company, those transaction fees will add up over time. For example, if you pay your monthly $2,000 mortgage payments through Plastiq, you’d be on the hook for a $57 fee each time. If this is a long-term plan, that’s an additional $684 for the year. And if you’re unable to pay your credit card bill on time, you’re likely to incur late fees from your card issuer as well. Impact to credit
Paying your mortgage with a credit card will likely use up a significant portion of your credit limit and increase , the percentage of available credit you are using. Your credit utilization ratio makes up 30 percent of your credit score, and it’s generally recommended your debt percentage should remain below 30 percent. Alternatives to paying your mortgage with a credit card
Mortgage forbearance
If you’re considering charging your mortgage loan payment to avoid a late fee or to prevent foreclosure, you may be better off requesting instead. This is an agreement with your lender to temporarily pause your payments for a specific period. Financial counseling
If you’re going through a rough patch financially, it’s essential to be proactive. We recommend contacting the , which can help you find a qualified credit counselor near you. They’ll be able to help you figure out the best path forward for your specific situation. Alternatives to avoid
You should avoid taking out a payday loan that charges massive interest rates. When calculated as an —the same calculation used for credit cards, mortgages and other loans—the . Interest rates of this sort are counter-productive to any effort to escape financial hardship. Along the same lines, credit card companies also charge significantly higher interest rates for , making them a poor option for making your mortgage payment for the same reasons as payday loans. The bottom line
There’s a reason most mortgage lenders, credit card issuers and card networks don’t allow you to charge a mortgage payment: Taking on one debt to pay another is a recipe for disaster. So unless you have the money in your bank account to make a full payment and avoid paying interest, it’s probably best not to charge your loan payment. If charging your mortgage payment is a one-off and you can comfortably handle the repayment at the end of the month, just make sure the benefits you’ll receive outweigh the fees you’ll end up paying. SHARE: Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Related Articles