Generally, I try to charge as many expenses as I can on my credit cards. That way, I’m able to rack up reward points or cash back on my purchases, which effectively gives me free money.
But one bill I’ve never tried to put on a credit card is my monthly mortgage payment. And while you may be tempted to charge your mortgage payments on a credit card, you may find that doing so is challenging as well as costly.
Mortgage lenders generally won’t accept credit card payments
Merchants who accept credit cards are commonly charged expensive processing fees for that convenience. Many businesses are willing to eat that cost because it allows them to serve their customers. But mortgage lenders generally aren’t willing to eat those fees, and so they’ll commonly deny borrowers the option to charge their monthly payments on a credit card, says Quicken Loans.
But it’s not just avoiding processing fees that mortgage lenders are concerned with. Mortgage lenders want to make sure you’re able to keep up with your debt. And they don’t want you racking up more debt when repaying existing debt.
If you send your mortgage lender a check at the start of the month, that money comes out of your checking account. But if you pay your mortgage with a credit card, you may not end up paying the entire balance at once.
Meanwhile, as you carry that balance forward and interest accrues against you, your debt could cost you even more. That could make your total debt — including your mortgage — harder to manage. That’s not a risk mortgage lenders want to take.
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There may be a workaround, but it could be costly
While mortgage lenders often won’t accept credit card payments directly, you may be able to work with a third-party processor to use one for your home loan payments. But in going this route, you’ll commonly be charged a fee. And that fee could wipe out the benefits you get from using your credit card.
Plastiq says you might be charged a fee of 1.3% to 3.5% to pay your mortgage by credit card. So, let’s say your credit card gives you 1% back on all purchases, and you owe $1,000 in monthly mortgage payments. Using your credit card will put $10 back in your pocket. But if you’re charged a 2% processing fee, it’ll cost you $20. So all told, you’ll be down $10, not up.
That’s why you’re generally best off not trying to pay your mortgage with a credit card. If you want to put expenses like gas and groceries on a credit card, do it. Chances are, you’ll get some bonus cash back in the process since these expenses are commonly eligible for that. But don’t reach for your credit card to pay your mortgage lender unless you’re in a really dire financial situation and that’s the only way to avoid defaulting on your home loan.
And even then, you may have some options, like putting your mortgage into forbearance. So talk things through with your lender before incurring expensive fees.
