How to pay your mortgage with your credit card  (2024)

Mortgage payments are one of the largest monthly bills for most homeowners. If you’re interested in maximizing your credit card rewards, you may be looking for ways to pay your mortgage with a credit card. While most mortgage companies don’t accept credit cards, there are ways to use your credit card to make your payment. In this article, you’ll learn how to make mortgage payments with a credit card and the pros and cons of doing so.

Can I pay my mortgage with a credit card?

Mortgage companies generally do not allow borrowers to make mortgage payments with a credit card. Credit card processing fees typically run 1.3% to 3.5% of the transaction amount, and mortgage companies don’t want to absorb those fees. Additionally, there’s the possibility of a chargeback if the cardholder disputes the transaction which is not a risk that the mortgage company wants to take.

Yet there are ways to pay your mortgage with a credit card. Third-party companies and alternative payment methods enable homeowners to use their credit cards to pay their monthly mortgage payments. However, these companies typically charge fees higher than the rewards you can earn, so it may not be a wise choice if you’re looking to earn extra rewards.

How to pay your mortgage with your credit card

Even with the additional fees and extra steps involved, you may decide that paying your mortgage with a credit card is a good idea. Here are a few ways to use your credit card to pay your monthly mortgage payments.

1. Third-party services

Third-party services accept credit card payments, then send money to the mortgage companies electronically or a paper check through the mail. Companies like Plastiq charge the cardholder a fee of about 3% of the transaction amount to cover their costs.

2. Buy prepaid gift cards

Some mortgage companies accept debit card payments from borrowers. If your mortgage company accepts debit cards, you may be able to use your credit card to buy a prepaid Visa, Mastercard, American Express or Discover gift card to make those payments. Prepaid gift cards typically charge fees of approximately $5 to $10 each. These fees can offset the value of rewards, especially if you need to buy multiple cards to make your payment.

Prepaid gift cards generally max out at $500 or $1,000, so they may not be enough to make your mortgage payment with one card. For those with larger mortgage payments, contact your mortgage company to verify that they allow split payments from multiple cards before pursuing this strategy.

3. Purchase money orders

Another option is to use your credit card to buy prepaid gift cards that can be used to buy money orders. Money orders act like personal checks when making mortgage payments. However, many retailers have stopped accepting prepaid gift cards for money orders due to the potential for fraud. If money orders are an option for you, factor in the costs—in time and money—of this extra step. Retailers typically charge about $1 for each $500 money order.

Should you pay your mortgage with a credit card?

Making mortgage payments with a credit card is a solid option if you earn enough rewards to offset the costs. Additionally, this strategy offers people extra time to earn the money to make their payments since credit cards typically offer at least a 21-day grace period. However, the additional costs and risks to your credit score may not be worthwhile for many homeowners.

Pros and cons of paying your mortgage with a credit card

Pros:

• Earn rewards and new card welcome bonuses.
• Provides extra time to pay off your mortgage payment.
• Avoids cash advance fees and higher interest rates.

Cons:

• Fees may be more than the rewards earned.
• Not all credit cards are eligible to make mortgage payments.
• Mortgage payments on a card could increase utilization and lower your credit score.

Things to think about if you use your credit card

Before attempting to make a mortgage payment with a credit card, consider all factors, not just the possibility of earning rewards. Rewards credit cards typically earn miles, points or cash back of 2% or less of the transaction amount. Yet, third-party fees typically cost around 3% of the payment, so you lose money on every transaction.

Paying your mortgage payment with a credit card can also affect your credit score. Mortgage payments are a large monthly expense, and they can eat up a big portion of your credit limit. As your credit utilization increases, your credit score tends to decrease. While this can be a good option in an emergency, it isn’t a wise long-term strategy.

Frequently asked questions (FAQs)