How to Pay Mortgage With Credit Card: A Comprehensive Guide

At first glance, the prospect of paying your mortgage with a credit card might seem straightforward. However, the reality is more complex.

Most lenders do not permit direct payments from a credit card to a mortgage company due to the risk and cost of transaction fees.

One available option is to use a third-party payment service. Some third-party payment processors act as intermediaries, accepting your credit card payment and then forwarding a check or electronic payment to your mortgage lender.

Before considering this option, make sure you understand the implications, including:

• Fees. Third-party services often charge a percent of your payment amount, which can potentially offset any rewards you earn using your credit card.
• Interest rate. If you can’t pay off the credit card balance in full each month, the interest charges could outweigh any benefits and make this option more expensive overall.

If, after consideration, you decide to proceed, here are step-by-step instructions for how to pay your mortgage with a credit card.

1. Find a reputable third-party service

Research third-party services that allow you to make mortgage payments with a credit card. Verify their fees, reliability, and payment processing times. Some potential options include:

• Plastiq. This is one example of a third-party payment processing company that allows you to use your credit card to make a mortgage payment. To make a payment, you send Plastiq the money for your mortgage using your credit card. Then, Plastiq will mail a check to your mortgage company or send payment through ACH transfer. You can set up a one-time payment or regular monthly payments. To use Plastiq, you need to have a Discover or Mastercard. Visa and American Express don’t allow mortgage payments.¹
• Prepaid debit card. If your lender accepts debit payments, you might consider purchasing a prepaid debit card with your credit card and using it to pay your mortgage. Before considering this strategy, check with your mortgage company to see if they accept debit payments.

2. Calculate the cost

Before using your credit card, you’ll want to make sure the service fees charged by the third-party provider don’t cancel out the benefits or rewards you might receive. Consider the immediate financial costs and the potential long-term impact on your credit score.

For instance, if your mortgage bill is $2,000 per month and you choose to pay with Plastiq, you will be charged a 2.9% transaction fee, which amounts to $58.²

($2000 x .029) = $58

If you want to use prepaid debit cards, they typically cost around $6 for up to $500. ^3,4 A $2,000 mortgage will require four prepaid debit cards. If they cost $6 each, that’s $24 just to purchase the cards.

If you earn 2% on a cash back credit card, you can earn $40 on a $2,000 mortgage, which means you won’t break even if you pay with Plastiq. Using prepaid debit cards, you can potentially earn around $16 in cash back.

($2000 x .020) = $40

3. Understand the terms

Read the fine print of both your credit card and the third-party service. Look for any restrictions, like limits on transaction sizes or types of cards accepted, and understand the timeline for payment processing to avoid late payments.

The same goes if you’re going to use a prepaid debit card. Confirm if your lender even accepts debit payments.

4. Monitor your credit card utilization

Your credit utilization ratio, also referred to as amounts owed, looks at how much of your available credit is in use and accounts for 30% of your credit score.⁵

Paying your mortgage with your credit card will quickly take up a large portion of your available credit and could negatively impact your credit score.

Consider the following before you make a mortgage payment with a credit card:

• Weigh fees against rewards: You might consider paying your mortgage with a credit card to earn points, miles, or cash back. Using your credit card to make your mortgage payments might also help you reach the spending requirement needed to earn a welcome bonus on a new credit card. However, if the third-party service charges are more than the value of rewards earned, the strategy loses its appeal.
• Evaluate the impact on your credit scores: High credit utilization can affect your credit score. Ensure you won’t go over 30% of your credit limit.
• Calculate the overall interest cost: If you’re unable to pay the credit card balance in full, the interest charges could make your mortgage payment significantly more expensive. Compare the APR on your credit card with your mortgage interest rate to assess the cost-effectiveness.

Like most financial decisions, there are pros and cons to making a mortgage payment with your credit card.

Pros:

• Earn credit card rewards: You can earn points, miles, or cash back on a large monthly expense.
• Avoid late payments: If you don’t have enough money to cover your monthly mortgage, using a credit card can prevent a late payment, provided you can pay off the credit card balance promptly.
• Generate interest: Using a credit card could give you the chance to keep more money in a high-yield savings account to earn interest.

Cons:

• Fees can outweigh benefits: Third-party processing fees may cancel out any rewards earned.
• Potential for financial mismanagement: Relying on credit cards for mortgage payments can lead to unsustainable debt if not managed carefully.
• Impact on credit utilization and score: High balances relative to your credit limit can lower your credit score.

Can you make a house payment with a credit card? The answer is yes, but whether or not you should is a different question.

While paying with a credit card can help to manage your cash flow and provide an opportunity to earn rewards, the associated fees, potential interest costs, and the impact on your credit score are critical considerations.

Explore more about the types of mortgage loans and mortgage rates.