If you have a top rewards credit card, you may want to know if you can pay your mortgage with a credit card to earn big bonus rewards. Credit cards are the best way to pay for a wide range of purchases, but paying for a mortgage with a credit card can be a challenge.
Whether you are looking to earn cash back or enough points for a free trip to the other side of the world, let’s take a look at how you can pay your mortgage with a credit card, and if it makes sense for you.
Can you pay a mortgage with a credit card?
The first question we have to look at is if you can pay a mortgage with a credit card at all. To understand that question, we have to look at how you pay a mortgage and how credit card transactions work.
Most mortgages are paid via an electronic payment called an ACH or a paper check. For a bank, processing an ACH costs a few cents.
Processing a paper check might cost a dollar or so when taking into account the machines and people that process paper check payments. Neither of those options, however, use a credit or debit card.
Because it costs 2% to 3% to process an average credit card transaction, banks (and some businesses) resist accepting credit cards for payment. Because you have to have a mortgage and don’t really have any other choice, the banks have cornered the market and have essentially blocked card payments for a typical monthly mortgage payment.
But there is a way around that card blockade. You essentially have to turn a credit card payment into a check. And that doesn’t mean using a credit card convenience check that charges a cash advance fee and doesn’t give you rewards. If you want to pay your mortgage with a credit card, you need a 3rd party service to make it work.
How to pay your mortgage with a credit card
Now that you know you can pay a mortgage with a credit card, it’s time to look at how to pay your mortgage with a credit card. The process is actually quite simple and works similar to your bank’s bill pay. There are just a few extra steps to make it work.
The most popular service to pay your mortgage with a credit card is Plastiq. Plastiq will run and process your transaction on your credit card and send the payment on to your mortgage bank… for a fee.
Plastiq typically charges 2.5% of your transaction value as a processing fee. Considering what it costs to process a card transaction, that is a reasonable deal. But compared to a fee of $0 to pay your mortgage with a check or ACH, you should seriously consider the cost before using Plastiq, or any similar service, to pay your mortgage with a credit card.
Also, keep your eyes open for Plastiq promotions, as you may be able to pay your mortgage with a credit card at a lower rate than the standard 2.5%.
You can also pay your mortgage with a card using manufactured spending techniques, such as buying gift cards and loading them into a Bluebird account or money orders for your payment. But for most people, Plastiq is the most practical way to pay with a card.
Should you pay your mortgage with a credit card?
You can pay your mortgage with a credit card, but should you? In most cases, the answer is no. There are only a couple of scenarios where using a credit card to pay a mortgage makes sense due to the fees.
First, never pay your mortgage with a credit card unless you can afford to pay off the balance in full each month. The cost of interest is much larger than the value of any rewards you can earn from a credit card if you don’t pay it off.
If you do plan to pay it off in full, the only time it really makes a lot of sense to use a credit card to pay your mortgage is when you are trying to reach a large credit card reward signup bonus. For example, many of the top credit cards offer 50,000+ bonus miles or points for new accounts, but you have to reach certain spending requirements to get the bonus.
Because a 50,000 point bonus is worth around $500, two domestic round-trip flights, or one coach flight to South America or Europe, it may very well be worth 2.5% of your mortgage to get that bonus. If you have a $1,250 mortgage payment, paying $32.25 in fees for a $500 reward makes a lot of sense.
But in general, you probably won’t get more than 2.5% back in value in points, miles, or cash back, so paying a typical mortgage payment with a credit card is not usually a great idea.
Decide if paying a mortgage with a credit card makes sense for you
Most of the time, paying a mortgage with a credit card is expensive and impractical. But every once in a while paying your mortgage with a credit card makes sense, and you can absolutely make it happen.
Just make sure you don’t spend more than you get back in rewards and your credit card mortgage payment should go through with flying colors.
Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated May 21, 2018 but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.