Is it possible to make mortgage payments using a credit card?
Can credit cards be used to pay for mortgage payments?
While most mortgage providers do not accept credit card payments, there are alternatives that involve fees and risks.
CNBC Select provides guidance on making mortgage payments using a credit card, recommending specific cards for maximum rewards and considering the risks and benefits.
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How to pay a mortgage with a credit card
Lenders generally do not accept mortgage payments via credit card due to the potential transaction fee, which can be up to 3.5%, and the possibility of paying a secured debt with an unsecured debt at a higher interest rate.
Indirectly, you can utilize your card to pay your mortgage.
Third-party payment platform
Some vendors will pay a lender on your behalf, such as Plastiq, which charges a 2.9% fee and allows funds to be sent via cash, check, or bank transfer.
Plastiq only processes mortgage payments for Mastercard and Discover cards, but not Visa or American Express. Verify with your issuer if there are any additional restrictions and if transactions are processed as purchases or cash advances.
Cash advance
You could utilize your card's cash advance feature to cover your mortgage payments, but be aware that there may be a fee for withdrawing cash and most issuers charge interest immediately upon posting the advance, rather than at the end of the billing cycle.
The rate on cash advances on a Capital One Venture Rewards Credit Card is higher than the rate on regular purchases.
The Venture card offers a cash advance with a service fee of either 3% or $10 (whichever is greater), and cash advances are typically not included in the 0% APR introductory period or rewards programs.
Balance transfer check
Account holders with certain card issuers can obtain paper checks linked to their account for purchasing items, obtaining cash, or paying for services. The fees for these checks can range from 2% to 5%, and transfer checks often have a higher interest rate compared to purchases.
If you are approved for a Chase Freedom Flex℠, you may receive balance transfer checks that can be made out to your mortgage provider. The fee for a balance transfer made within 60 days of opening a Freedom Flex card is $5 or 3%, whichever is more. After the intro period, it goes up to $5 or 5%, whichever is higher.
Freedom Flex cardholders may receive a 0% intro APR on purchases and balance transfers for the first 15 months after account opening. After that, the base APR ranges from 20.49% to 29.24% variable.
Rocket Visa Signature Card
While you cannot pay your monthly mortgage bill with a Rocket Visa Signature Card, you can use the points earned through purchases to reduce your principal with a Rocket Mortgage loan.
Points earned by cardholders can be redeemed as a statement credit or used towards a down payment or closing costs on a future Rocket Mortgage loan.
Benefits of paying your mortgage with a credit card
While financial advisors recommend using a card only if you can afford to pay it off on time and in full, there are benefits to doing so.
Welcome bonus or rewards
To maximize the benefits of your credit card's rewards program, it's best to use it to pay off your mortgage, which is typically the largest expense for most Americans. However, if you're looking to take advantage of a welcome bonus, you'll need to apply for a new card and use it within a specific time frame.
The Capital One Quicksilver Cash Rewards Credit Card offers a $200 welcome bonus when you spend $500 within the first three months from account opening. If your mortgage payment is $1,500, you'd make more than $150 after paying Plastiq's 2.9% service fee. Additionally, you'd receive 1.5% cash back, or $22.50, as part of the card's rewards program.
0% introductory APR
Earn an unlimited 1.5x miles per dollar on every purchase with the Discover it® Miles card, making it one of the most flexible travel cards available. With this card, you can book flights on any airline or stay at any hotel. As a welcome bonus for new members, Discover will match all the miles you earn at the end of your first year. If your monthly mortgage payment is $1,500 ($18,000 annually), you'll earn 54,000 miles, worth approximately $540.
You'd net a modest $18 after paying a fee of about $522 from Plastiq.
The card offers a 0% intro APR for 15 months on purchases, but after that, the variable APR ranges from 17.24% to 28.24%. This flexibility can help with payments, but it's crucial to pay off the total before the intro period ends to avoid a higher interest rate than your mortgage.
Risks of using a credit card to pay your mortgage
If you don't pay the full balance of your mortgage payment using a card, you may incur fees.
Interest and transaction fees
If you have a balance on your card, the interest earned could offset any rewards you receive, even if you pay off your balance before the end of the billing cycle, you'll still have to pay the service fee from Plastiq.
The Capital One Savor Cash Rewards Credit Card offers a $300 welcome bonus when you spend $3,000 in the first three months of opening an account. With Plastiq, you can pay your $1,000 mortgage payment for a fee of $29 (2.9% of $1,000), leaving you with $271 to keep.
The Capital One Savor card offers a starting APR of 19.99% on purchases, but if you don't pay the full amount immediately, you'll quickly accrue debt. Moreover, payments made to Plastiq are not eligible for Savor's top cash-back categories, which include 5% cash back on hotels booked through Capital One Travel, 4% cash back on dining, and 3% cash back on groceries.
Impact on credit score and credit utilization ratio
If you fail to pay your credit card bill on time, it could significantly harm your credit score.
If you pay your credit card balance on time, your credit utilization ratio may still be affected due to the delay in reporting from issuers to credit bureaus, as reported by Experian.
Bottom line
You can usually only make a mortgage payment on your credit card through a third-party platform, but paying one debt by adding to another is risky and should only be considered if you can cover the payment in full. Additionally, ensure that the cash value of any credit card rewards outweighs the fees and interest you might accrue.
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For rates and fees of the Discover it® Miles, click here.
