When Paying Off Your Mortgage With a Credit Card Makes It Sense (and When It Doesn’t)

Paying a mortgage with a credit card is usually a bad idea. The only exception, though, is when you are chasing bonus rewards on a new card because there is a scenario in which it can pay off — this is how it works.

When to use a credit card to pay your mortgage

Most bonus cards offer spending bonuses of around $ 1,200 in cash in the form of points or miles. These bonuses are usually based on targeted spending for the first few weeks or months after receiving a new card. To take a typical example, the Capital One Venture Bonus Card offers a reward of $ 1,020 as long as you use the card for $ 3,000 purchases within the first three months after receiving the card.

Since mortgage payments are often the largest recurring expense you’re going to pay anyway, why not use plastic? If you pay for the card immediately , you can be sure that you are eligible for the bonus.

There is one catch, however – most mortgage providers don’t directly accept credit card payments, so you’ll need a third-party service to do this.

How to pay your mortgage with a credit card

Currently, the only financial service provider that will allow you to pay your mortgage with a credit card is Plastiq . They act as an intermediary, withdrawing money from your card and then sending a check or payment through ACH to the mortgage provider. Unfortunately, there is a 2.85% fee on every payment. This means you pay $ 28.50 for your $ 1,000 mortgage payment.

Using the Capital One card as our example, you can claim the $ 1,200 signup bonus by withdrawing $ 3,000 from it , with an additional 2.85% transaction fee (if you charge a mortgage fee). If you had two separate mortgage payments of $ 1,500, the total transaction cost would be $ 85.50. As a service charge, this is not worth it. However, it’s well worth it if it helps you get the remaining $ 1114.

On the other hand, transaction fees don’t work when you’re just chasing cashback bonuses. Refund cards often offer 2% on all purchases, but for example, you will lose money due to Plastiq’s 2.85% commission.

It’s also worth reiterating that making mortgage payments with a credit card only works if you pay off the balance immediately . Chasing high interest debt bonuses isn’t worth the risk if you’re not sure you can afford to make payments.

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