Can you use a credit card to make your mortgage payment? The short answer is “yes… kind of.” The reasons you might feel like it’s a good idea to pay your monthly mortgage can vary: maybe you are short on funds, or you think the rewards will be worth it. If you are thinking of going this route, you should open your eyes as to the facts about putting your payment on credit.
First of all, not every lender will offer plastic as a payment option. Every bank has different guidelines, and some outright disallow using a credit card as a method of payment. There is, simply put, no reason for your lender to do so. "Most merchants have an incentive to accept credit cards—even with the transaction fee—because they know you're likely to spend more than you would if you paid in cash," says says Adam Jusko, founder and CEO of ProudMoney.com, an online personal finance portal. "They figure they'll make up the fee in extra sales and profit. Your mortgage company doesn’t have this incentive. You aren’t going to buy 'more mortgage.'"
If your bank doesn’t allow direct payment with a credit card and you are determined to do it anyway, you will have to turn to a third-party service. This can mean paying a “convenience fee” of around two percent of your mortgage payment. Then there’s the interest you will be paying on your credit card, assuming you aren’t able to pay it off the same month you make the payment, which is likely. All things considered, you are likely to pay an extra 25 percent if you pay your mortgage with a credit card.
And no, the rewards aren’t worth it. Whether you get points or credits or even cash back, the math just doesn’t work out unless you can put the payment on the card and then immediately turn around and pay off the bill. "You’ll almost never find a credit card that has rewards worth more than the transaction fee," Jusko notes. "The best credit cards will give you a 2% rebate on your purchases, so you won’t likely come out ahead."
In short, the only reason to pay a credit card bill with plastic is if you are in deep trouble and can’t pay it any other way. And if this is the case, you should take a long, hard look at your financial situation, because you are likely in trouble.
