Most lenders typically don’t allow credit card payment for mortgage because of the processing fees that they would incur.
These fees, which are charged by the credit card companies, are generally why other types of businesses charge an extra fee or don’t allow credit card payments at all.
However, if your mortgage lender does allow it (which is rare), or if you use a third-party service, it’s possible to pay your mortgage with a credit card. Third-party services like Plastiq can allow this kind of transaction. They’ll charge your credit card for the mortgage payment and send a check or bank transfer to your lender. But it’s important to note that these services usually charge a fee, often around 2-3% of the transaction.
That brings us to another important point: Is it a good idea to pay your mortgage with a credit card? There could be some benefits if everything aligns just right. For example, if you’re trying to meet a minimum spend on a new card to earn a sign-up bonus, or if you have a card that provides rewards or cash back that outweigh the transaction fee.
However, it’s crucial to consider the potential drawbacks. Paying your mortgage with a credit card means you’re swapping secured debt (your mortgage, backed by your home) for unsecured debt (credit card debt). The interest rate on credit cards is typically much higher than on mortgages. So, if you don’t pay off your credit card balance in full each month, you could find yourself facing high interest charges.
Moreover, repeatedly making large charges to your credit card could increase your credit utilization ratio, which may negatively affect your credit score. And, if you ever find yourself unable to pay your credit card bill, you could end up in debt and risk damaging your credit score significantly.
In a nutshell, while it might be possible to pay your mortgage with a credit card, it’s typically not the best idea unless you’re very certain you can pay off your balance in full each month and have calculated that the rewards outweigh the costs.
- Can I pay my mortgage with a credit card? In theory, yes. In practice, it’s a bit like trying to ride a unicycle uphill – not many mortgage lenders will let you do it, and even if they do, it can be a tricky balancing act.
- Why won’t my lender let me pay my mortgage with a credit card? It’s mostly because they don’t want to pay the processing fees charged by the credit card companies. They’re a bit like a grumpy diner who refuses to pay for extra guacamole.
- Are there any third-party services that can help me do this? Yes, companies like Plastiq can allow you to pay your mortgage with a credit card. But be warned: they’ll likely charge a fee, just like when you order that extra-large popcorn at the movies.
- Why would I want to pay my mortgage with a credit card? Well, it could help you earn reward points or meet a spending requirement for a sign-up bonus. It’s a bit like eating broccoli for the health benefits—even though it might not taste great, it could have a payoff.
- Are there any downsides to paying my mortgage with a credit card? Indeed, there are. If you don’t pay off your credit card balance in full each month, you might face high interest charges. It’s a bit like eating the whole cake instead of just one slice—you might enjoy it now, but you could regret it later.
- Can paying my mortgage with a credit card affect my credit score? Yes, it can. Making large charges to your credit card could increase your credit utilization ratio, which might make your credit score feel as low as a limbo stick at a dance-off.
- What’s the golden rule of using a credit card? Always, always pay off your balance in full each month. This is the “eat your vegetables” of credit card use—good for your financial health!