Can You Pay Your Mortgage With A Credit Card?
Yes, you can pay a mortgage with a credit card. Although your local mortgage lender won’t let you swipe your Mastercard for your monthly payment, there are workarounds for paying your mortgage with your credit card. Before employing one of these methods, you should consider whether or not you should use your credit card to pay your mortgage.
There are very few situations in which it makes financial sense to pay your mortgage with your credit card. You almost certainly will pay more money if you use plastic over paper when paying your mortgage. It also will take time and creativity to make this a reality. Because of this, we only recommend using a credit card if it will keep you from avoiding severe consequences.
How to pay your mortgage with a credit card
There are multiple ways to use your credit card for your mortgage payment. The workarounds we’ve found require using additional services to get the cash to send to your mortgage lender.
All of them add an extra layer of complexity to making your payment. Additionally, they are not free — you will pay substantial fees with all these options.
Use a third-party service such as Plastiq
You can use a third-party payment service to act as an intermediary between you and the bank. The service will charge your credit card for the mortgage payment and send the funds to your bank via electronic payment or a paper check.
Plastiq is one such service that can handle this. Of course, there’s a cost to this service; you’ll pay a 2.9% transaction fee for credit card payments. You’re also on the hook for getting the money from Plastiq to the bank. That’s another $0.99 to $39, depending on which type of delivery method you choose.
The average mortgage payment in the U.S. is $2,317 so we’ll use that to do these calculations.
Here’s a look at how the math works out
($2,317 payment x 0.029 transaction fee) + $0.99 ACH transfer fee =
$67.19 + $0.99 =
$68.18
Generally, you cannot pay off a debt with another form of debt.
Plastiq only accepts Mastercard and Discover credit cards because Visa and American Express user agreements prohibit this type of service.
Cash advance
Another way to get cash from your credit card is to do a cash advance. You can withdraw cash at an ATM or bank and use the cash to pay your mortgage payment.
The main reason why this isn’t a good idea is because there’s usually no grace period for cash advances. Credit cards usually only charge interest if you have a balance remaining after your payment due date. However, cash advances accumulate interest from day one. The average regular APR for credit cards is currently 24.66%, and some credit cards charge a higher rate for cash advances.
Most cards also charge a steep cash advance fee that is often stated as “the greater of either $10 or 5%.” The specific numbers vary between cards, but this is a pretty solid number to use as an estimation.
Taking out a cash advance might not even be possible if your line of credit is lower than the amount you need.
Here’s a look at how the math works out on a $2,317 mortgage payment with a 24.66% APR and a 5% cash advance fee:
$2,317 x .2466 APR = $517.37 interest you’d pay over a year
$517.37 interest /365 days in a year = $1.42 interest you pay each day
$1.42 interest x 30 days = $42.60 interest
$2,317 x 0.05 cash advance fee = $115.85
Balance transfer check
Sometimes, credit card companies send you balance transfer checks that you can use to pay off a debt. The amount is then put on your new credit card account, often with a promotional APR that lets you pay it off for a year or more without interest.
This is a viable option if you make the check out to your mortgage company and have enough available credit on your account. An intro APR may alleviate some financial stress but you don’t get rewards on balance transfers.
Here’s a look at how the math works out, assuming you get an intro 0% APR for 12 months with a customary 5% balance transfer fee:
$2,317 x 0.05 balance transfer fee = $115.85
Tip
Banks may also send out convenience checks, which are often treated as a cash advance (which means interest begins to accumulate from the first day). Read the fine print carefully to ensure you know what you’re signing.
Buy prepaid cards and convert to money orders
This method is tedious but could work, and is the least expensive option, if you can find a place to accept prepaid debit cards for money orders.
You may be able to use your credit card to buy enough Visa or Mastercard prepaid cash cards from a retailer. You can then use these cards to pay for a money order to take your mortgage lender.
For example, the cost for Visa Vanilla gift cards is the dollar amount plus a $6.95 fee per card.
For a $2,317 mortgage, you’d have to buy five $500 cards. If you want to get closer to the exact amount you need, you must buy extra cards in smaller denominations which adds to the fees. Shipping adds another $10.95 if you choose the least expensive option.
You’ll also have to pay money order fees. Walmart offers the lowest price, at $1 each. Usually, money orders are limited to $1,000, so you’d need to get three money orders.
Here’s a look at how the math works out to buy the prepaid cards and money orders:
Prepaid card cost: (5 x $6.95) + $10.95 = $45.70
Money order cost: 3 x $1= $3
Total cost: $45.70 + $3 = $48.70
Be sure to contact your mortgage holder to ensure that money orders are an acceptable form of payment. Additionally, if you use this method, you should make your payment in person to ensure that it is credited to you, since there is no personal information on the money order.
Use the Rocket Visa Signature Credit Card
You can’t pay your mortgage with the Rocket Visa Signature Credit Card, but the reward points you earn with it can be used toward your Rocket mortgage or a down payment on a new home with a Rocket Mortgage. Customers earn 5 points on every $1 spent, but the final value of the rewards vary depending how you redeem them.
There are three ways to redeem your rewards, each with a different cash value.
| Cash back rate | When you redeem for: | Value of 25,000 points |
|---|---|---|
| 5% | Closing costs and/or a down payment on a Rocket Mortgage | $250 |
| 2% | Rocket Mortgage principal | $100 |
| 1.25% | Statement credit | $62.50 |
Obviously, you’ll get the most value if you save up your rewards for a new home. After you take out the mortgage, you can still apply your rewards toward your principal at a respectable rate. As a cash back credit card, this isn’t a great card since it charges an annual fee of $95 (waived for customers with an existing Rocket mortgage). If you want a 2% cash back card with no annual fee, the Citi Double Cash® Card, Wells Fargo Active Cash® Card or Fidelity® Rewards Visa Signature® Card are better choices.
Factors to consider before using your credit card to pay your mortgage
Fees. vs. rewards
The fees from paying your mortgage with a credit card will likely exceed any rewards that you earn, if you’re able to earn rewards at all. The only situation that might make mathematical sense is if you’re trying to earn a sign-up bonus. However, there are better ways to meet the spending requirements for a bonus, including buying gift cards to a place where you normally shop or dine. (Note, you won’t earn rewards on this type of spending.) Or you could prepay utilities that accept credit card payments.
Interest charges
In the above examples, the interest on taking out a cash advance was more than a dollar per day. That might not seem like much, but added up, it’s a nice chunk of change. We don’t advise taking out a cash advance to pay your mortgage unless you have exhausted all alternatives.
Impact on credit score
This is a less tangible risk of using your credit card to pay your mortgage, but a valid one that needs consideration. Putting your mortgage payment on your credit card may use up a significant part of your credit line.
If you have a $5,000 credit limit and a mortgage of $2,317, for example, you’re using almost 50% of your credit limit. This doesn’t include fees and interest, nor does it factor in charges you’ve already made.
Ideally, you should keep your credit utilization ratio under 30%, or preferably under 10%. Since this metric accounts for 30% of your credit score, you can expect a significant score drop from using half your available credit limit.
Pros and cons of paying your mortgage with a credit card
| Pros | Cons |
|---|---|
Improved cash flow Credit card rewards Avoid a late payment May help you earn a sign-up bonus | High interest and fees Negatively impacts your credit score Time-consuming to handle the necessary workarounds Increased credit card debt |
Alternatives to paying your mortgage with a credit card
You may have some time before late fees kick in. The best way to gather relevant information for your mortgage is to make a quick call to your lender if you can’t find the info in your online payment portal.
Late fees on mortgages typically range from 3% to 6%, far lower than the average credit card APR of 24.66%. The late fee might be worth it if you’re waiting for a paycheck to hit your account and know you can pay soon after.
A personal loan can give you the funds you need to avoid getting too far behind on your mortgage. Since these can take up to a week or more to process, it’s best to apply for a personal loan as soon as needed.
A simple conversation could go a long way. The lender might reduce or waive a late payment fee as a one-time courtesy. They can also give you information about programs, such as mortgage forbearance, that you could use if your inability to pay stems from more profound circumstances.
If cash flow is tight, causing you to consider putting your mortgage payment on plastic, consider putting other expenses on a 0% APR credit card. You can take your time paying off your bill while ensuring you stay in your home. Alternatively, if credit card debt is causing financial struggles, consider a balance transfer credit card that lets you move high-interest debt to a card with a low intro APR.