Mortgage borrowers may wonder about paying their mortgage with a credit card––maybe once in a while.
Sometimes, if you find yourself in financial trouble or just need some extra cash, you may find a credit card the best option to use for a short-term fix. But besides taking out a cash advance or using a credit card to cover a mortgage payment in financially stressful times, a credit card can help you gain rewards, points or cash back incentives. You can also take advantage of sign-up bonuses.
What are some limitations?
First, mortgage lenders will not accept credit card payments directly, so you’ll have to find another way to make the payment with your card.
It’s also important to note, I do not recommend paying your mortgage with your credit card regularly if you are in a negative financial situation. Credit cards charge higher interest rates and therefore can be expensive to use so it would NOT make any financial sense to make mortgage payments simply to stay on top of your finances. Here, a debt consolidation home loan would make more sense and would be a cheaper option.
When it makes sense to make your mortgage payments with a credit card.
It definitely makes sense to pay your mortgage with your credit card if it helps you gain points, cash back incentives and air miles, for example. Some newer credit cards offer triple the amount of points for fresh charges, so you could take advantage of this by using your mortgage payments to collect the points. For this strategy to work, you would also need to pay your credit card before the due date or even right away to avoid any extra interest charges or unnecessarily paying high interest. Ensure you also pay the balance in full.
Also, if your mortgage rate is low and your credit card company is offering a higher rate of rewards, it would absolutely make sense to take advantage of this offer. For example, if your mortgage is 1.5% and your credit card company is offering 4% cash back, then it’s helpful to pay your mortgage with your credit card to gain the cash back reward.
How to Pay Your Mortgage with a Credit Card
Convert Gift Cards into Money Orders
One way you can use your credit card to make mortgage payments is by converting gift cards into money orders. You can then use the money order to pay or prepay your mortgage at your closest branch directly through the teller or through your bank account.
Use a cash-advance
You can also speak to your credit card company about using cash-advances to pay your mortgage. From your online banking, you can transfer money from your credit to card to your personal account to pay your mortgage. You must first check with your financial institution and verify the points, rewards and cash-back incentives would still get offered.
In conclusion, paying your mortgage with your credit card is not always the best option and is not recommended if you are trying to make the payments to avoid delinquency. Here, the best option is debt consolidation through refinancing. However, if you want to take advantage of points, welcome offers, and cash backs, you may find using a credit card to pay your mortgage is a good option.
Do you have mortgage questions?
Please call or write.
Sarah A. Colucci, Mortgage Agent Lic. M14000929
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
By: Sarah Colucci
Senior Mortgage Agent, Lic. M14000929