Paying Your Mortgage With a Credit Card: Hacks & Considerations

  • Most lenders won’t allow you to pay your mortgage with a credit card.
  • A third-party payment processor called Plastiq facilitates mortgage payments by credit card for a 2.85% fee.
  • If you decide to use a credit card, make sure you have a plan to pay off your balance in full and on time.

Some homeowners might be drawn to the idea of ​​paying their mortgage with a credit card for the potential of earning credit-card rewards. Others may have a brief gap in their cash flow and need a quick solution.

Whatever your situation, it’s important to weigh all of the potential benefits and drawbacks when considering whether to use a credit card to make your monthly mortgage payment.

Paying a mortgage with a credit card isn’t simple, but it can be done.

It can be appealing to charge mortgage payments to a credit card. After all, it’s likely your largest recurring expense – or one of your largest – each month. You may dream of racking up rewards points or simply need to keep cash handy for other expenses.

Unfortunately, mortgage lenders don’t usually accept credit-card payments directly. However, you may be able to use a third-party service to complete the transaction.

How to pay your mortgage with a credit card

In order to pay your mortgage with your credit card, check out Plastiq, a third-party platform that offers this service. With Plastiq, you can pay your mortgage or even a home equity line of credit (HELOC) with your Mastercard or Discover credit card. The platform doesn’t support Visa or American Express for mortgage payments.

If other third-party processors add this service, you may be able to find a more suitable workaround for paying your mortgage with a credit card in the future. But for now, Plastiq is the only option.

Advantages

There are some potential advantages to paying your mortgage with a credit card.

  • Earn credit-card rewards: One popular reason to use a credit card is to maximize sign-up bonuses and rewards. Putting a mortgage payment on a credit card could help you quickly earn cash-back rewards, free airfare, discounted hotel rooms, and other perks. However, credit-card rewards must outweigh the fees charged by a third-party payment processor to be worthwhile.
  • Avoid a late payment: Paying your mortgage with a credit card could buy you a few weeks’ time. As Crystal Cox, a CFP® professional and senior vice president at Wealthspire Advisors, notes, this strategy enables you to pay the mortgage on time, while keeping cash on hand.

Disadvantages

Paying your mortgage with a credit card also has some disadvantages.

  • Higher interest charges: You’ll incur interest charges on your credit-card balance if you’re unable to pay it back in full by the due date. Cox points out that credit card interest rates are much higher than mortgage rates. In the second quarter of 2022, the Federal Reserve reported an average credit card interest rate of 16.65%.
  • Processing fees: The processing fees for using a credit card make this payment method difficult to justify. Credit-card rewards aren’t always a flat percentage, but they rarely return more than 3%. Since Plastiq currently charges 2.85% for transactions, you’ll come out slightly ahead, at best.
  • Credit utilization impact: Another downside of paying a mortgage with a credit card is its potential impact on your credit utilization. Making a large mortgage payment will push you closer to your credit limit and increase credit utilization, potentially harming your credit score. The Consumer Financial Protection Bureau recommends keeping your credit utilization ratio below 30%.

Other ways to pay your mortgage

Since mortgage lenders don’t accept credit-card payments, you may be wondering how else to pay your mortgage. In the digital age, you should always have the option of paying via your lender’s website or app.

You should also be able to pay with the old-fashioned method of mailing a paper check, but be sure to factor in sufficient time for the check to reach the lender. Maybe you’d even prefer dropping it off in person, if your lender operates a local bank branch or credit union. Make sure to verify the payment method you plan to use is compatible with your lender.

If credit-card rewards are your motivation, you can still reap those benefits through other home costs. Here are some expenses you might consider charging to your credit card:

  • Utilities, such as gas, electricity, and water
  • Trash collection services
  • Internet
  • Homeowners association fees
  • Appliance purchase and repair
  • Landscaping and gardening

Keep in mind that the same guidance about credit utilization applies with other household expenses. If you have a particularly costly month, pay off your balance as soon as possible to keep your credit utilization ratio low.

The bottom line

“Paying a mortgage with a credit card seems like an enticing idea,” says Stephen Keighery, CEO and founder of Home Buyer Louisiana. It could buy you time if you’re in a financial pinch, but Keighery warns that it doesn’t “magically erase” financial trouble. Plus, there are fees to consider.

Maximizing credit-card rewards is appealing, but fees and potential credit score impacts can negate those benefits. The majority of homeowners are likely better off earning credit-card rewards from other home-related purchases.

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