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Can you pay a mortgage with a credit card?

It’s possible to make mortgage payments with a credit card. But is it a good idea?

Although it’s possible to make mortgage payments with a credit card, you’ll add significant costs to your payments and risk damaging your credit score.

June 17, 2022

Technically, it’s possible to make mortgage payments with a credit card, but one question still stands: is it a good idea?

Most mortgage holders will face obstacles. Mortgage lenders typically won’t allow you to use a credit card for payments, in part because they don’t want to pay transaction fees. But there are workarounds, where you can use the credit available on your card to make home loan payments. 

How to pay a mortgage with a credit card

Even though most mortgage lenders don’t accept payments via credit cards, there are workarounds.

1. Consider using a third-party service

Currently, there’s only one payment system that accepts and lets people pay for their mortgage with a credit card. Plastiq charges 2.85% of the total transaction, and the mortgage lender will receive a check for the amount processed through Plastiq.

But like any charge on your card, if you don’t pay back the amount before the end of your billing cycle, you’ll face your card’s high interest rate.

For those who are looking to get a one-time sign-up bonus, Plastiq can be a good alternative. However, Plastiq doesn’t support every payment network or credit card issuer.

2. Secure a prepaid card or money order

Credit card holders can also make a mortgage payment using a prepaid card purchased at a local retailer. Technically, if you use your credit card to purchase the prepaid card, you’re using your credit to make your home loan payment.

Make sure your mortgage lender accepts payments through a prepaid card. There might also be a small fee associated with this mode of payment.

Another option is to purchase a money order with a prepaid card, then using the money order to make a mortgage payment.

Should you use your credit card for mortgage payment?.

Before you make a decision to pay a mortgage with a credit card, it’s good to know the 3 reasons whether it’s a good idea or not:

Consider these factors before using your credit card on a home loan:

1. The cost of earning rewards

If you’re in it to earn more rewards, do the math first. Add up the fees involved. They might be more than the rewards you’re aiming to earn. 

If you’re eyeing a credit card’s welcome bonus, charging a mortgage payment can help you reach the minimum purchase level. But make sure you can pay it back before the end of the billing cycle and take a second look at the fees and charges involved. 

2. Potential fees and interest charges

Mortgages often come with a low or fixed interest rate, whereas the average interest rate on a credit card is around 16%. When you use your cards for home loan payments, you’re transferring the low-interest debt of your mortgage to a credit card with a higher interest rate. You’ll end up paying significantly more in interest charges. 

3. Potential ate payments

Like anything you charge to your card, make sure you can repay it, ideally with money in the bank and before the end of each billing cycle. If you’re scrambling for the funds, you might miss your due date, with a late payment that can put your credit score in danger.

What if you’re trying to avoid foreclosure?

If you’re likely to miss an upcoming mortgage payment, you could use your credit card in one of the ways explained above. But it’s hard to imagine an instance where this is a good idea. You’ll be adding credit card debt on top of your mortgage debt and under a much higher interest rate. 

Spare your credit cards and look for other ways to avoid foreclosure. Minimizing your card debt and keeping your credit score as healthy as possible may help with potential foreclosure remedies. 

Recommended Readings:

Top 10 common credit card mistakes and ways to avoid them.

6 best ways to speed up saving for a house

Technical Content Writer

With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.

With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.

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