How to Use a Credit Card to Make a Mortgage Payment
If you have a credit card that offers significant travel or cash back rewards, you may be looking for ways to increase the spending on your credit card to maximize those rewards. Since your mortgage payment is likely one of your largest expenses each month, it may be tempting to put the payment on your credit card.
Before making this decision, there are a number of facts you must consider. It may not be easy to put your mortgage payment on your credit card. In fact, many mortgage companies do not allow a credit card to be used as a payment method. If your mortgage company accepted credit card payments, they would have to pay the card company a transaction fee, which could be hefty, depending on the amount of your payment. For example, if your mortgage is $2,500, and the credit card company charges a 3% transaction fee, your mortgage company must pay $75, which cuts into their profits.
Thus, to pay your mortgage with a credit card, you will likely need to use a third party processor, such as Plastiq, which will charge a 2.5% processing fee. Currently, Mastercard is the only issuer than can be used on Plastiq. If your mortgage payment is $1,500, using Plastiq will cost you an additional $37.50. If your goal is to maximize your credit card rewards, you will want to consider whether the rewards you are earning are worth these additional fees.
If you do decide this additional fee is worthwhile, make sure you can pay off the debt when you receive your credit card statement. Unless you have a 0% APR credit card, you will accrue interest on any charges you make on your card, and these interest fees can be as high as 24.99%. Using the example of a $1,500 mortgage payment, this could equate to nearly $375 in interest fees. No credit cards offer rewards compelling enough to justify these fees.
If you do decide to use your credit card to pay your mortgage, here are the steps you need to follow:
- Choose a credit card with a low interest rate that offers excellent rewards that you will use. For example, the Capital One Venture Rewards credit card offers a one-time bonus of 50,000 miles when you spend $3,000 within the first three months of opening your account, which equates to $500 in travel. After the bonus, you earn 2X miles on other purchases. If you often travel for work or pleasure, these types of awards may justify the fee charged by a payment processor, such as Plastiq.
- Create an account with Plastiq.com. You will need to enter your Mastercard information and mortgage account details.
- Pay off the balance each month.
If you follow these three simple steps, you can make your mortgage payment with your credit card, reap some rewards, and avoid expensive interest fees.