Can You Pay Your Mortgage with a Credit Card?

If you’re in a tight financial spot, paying your mortgage could seem like an insurmountable mountain. It’s a large sum of money to fork out every month. If you’ve been through a recent pandemic-related lay-off, paying your mortgage could even seem impossible. 

Naturally, you should be looking for creative solutions to make your money work. If your cash flow is tight, you might just need to buy some time before your next paycheck or side-hustle money comes in. Perhaps you’ve been wondering whether your credit card is a possible solution. 

Before you hop on the credit card train though, there are a few things you need to consider. Firstly, you have to check can you pay your mortgage with a credit card. And if you can, is it even a good idea?

Let’s take a look at some of the obstacles you might face and the pros and cons to consider if you want to pay your mortgage with your credit card. 

Is It Possible to Pay a Mortgage with a Credit Card?

Unfortunately, the answer to “can you pay your mortgage with a credit card” is – it depends. It depends on who your credit card provider and mortgage lender is. It isn’t common for companies to accept debt for-debt payments. There is a good chance either your credit card company or your mortgage lender won’t allow it. 

But some credit card companies do allow you to pay your mortgage with your credit card. These companies include Discover or Mastercard. Other companies such as Visa and American Express don’t allow mortgage payments at the moment. 

If your credit card company allows you to pay your mortgage with your credit card, it is probably still not as straightforward to actually make the payment. There are still a few obstacles you’ll need to navigate.

How to Pay Your Mortgage with a Credit Card

Often, the easiest way to go about it is to use a third-party payment service such as Plastiq. These third-party service providers facilitate mortgage payments with credit cards such as Discover or Mastercard.

If your lender is flexible, they might accept electronic payments for your mortgage. In this case, the third-party service provider will make an electronic payment to your lender. Alternatively, the service provider will cut a check. 

If you use a third-party service provider, you can pay manually or set up monthly auto payments. You also have the option of only doing a one-time payment. 

Always keep in mind third-party service providers will charge a processing fee each time you use your credit card to pay your mortgage. Plastiq, for example, charges a fee of 2.85% of your mortgage payment. So, if your mortgage payment is $2’000, your processing fee would be $57 each time.

Things to Consider when Paying a Mortgage with a Credit Card

Just because you can pay your mortgage with your credit card doesn’t mean it is necessarily a good idea. Sure, you could score some great credit card rewards. But it will come at a cost. 

Here are a few things you should consider before paying your mortgage with your credit card.

Fees vs. Rewards

Typically, your mortgage payment would be a large amount. It could be very tempting to want to pay this large bill with your credit card and rake in all the related rewards. However, if there is a large third-party processing fee connected to the payment, it could outright eliminate the advantages you get through your credit card rewards. It could even leave you with a negative despite all the credit card rewards you collect. 

Say you have a mortgage payment of $3’000. If you pay a processing fee of 2.5% on that, you pay a processing fee of $75 each time. Of course, the reward rates you get from your credit card will differ for each credit card provider. But it’s unlikely that the rewards you get will exceed the actual processing fee you’ll have to pay. The only way it could make sense to pay your mortgage with your credit card in this context would be if paying your mortgage will help you meet a minimum spending requirement that qualifies you for a specific bonus or reward that is much larger than the fee you have to pay. But even if so, this is likely to only be a one-time reward.

Cost of Interest

Most credit cards have an initial interest-free period where no interest is charged on the outstanding balance. If you pay your credit card bill in full each month, you won’t have to pay credit card interest on the mortgage payment you make with your credit card. 

But if you don’t, the large outstanding balance on your credit card could accumulate significant interest. Not only will this interest wipe out any possible rewards you earned by paying with your credit card, but it is an additional interest you’ll pay on top of the interest you’re already paying on your mortgage. That’s a double whammy you’d want to avoid! 

Effect on Your Credit Score

Remember, your credit utilization rate has a big impact on your credit score. Ideally, you want to keep your credit utilization rate below 30%. If you choose to pay your mortgage with your credit card, it could increase your credit utilization rate beyond the ideal 30%. As a result, it could harm your credit score. 

Let’s look at an example. If you have a $10’000 limit on your credit card but you’ve already used $2’500 of your limit, you have a current utilization rate of 25%. Say your mortgage payment is $3’000. Paying your mortgage with your credit card will push up your credit utilization rate to 55%.

If you really need to pay your mortgage with your credit card, one way you could counter this negative is to request a credit limit increase on your credit card. By increasing your credit card limit you’ll bring down your credit utilization rate. 

Should You Pay Your Mortgage with a Credit Card?

Choosing to pay your mortgage with your credit card should only be done after you’ve carefully considered all the factors we discussed above. 

If it is your only option, you might be willing to take on the possible risk rather than defaulting on your mortgage payment. If you have other options, consider whether the rewards you’ll get outweigh the fees you’ll pay. And whether navigating the additional admin is worth it. 

Finally, be careful of additional interest. Make sure you pay your credit card bill at the end of each month. 

Conclusion

Now you don’t have to wonder “can you pay your mortgage with a credit card?”. Carefully consider all the factors and make the best decision for your financial situation.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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