Paying your mortgage with a credit card may seem like an unconventional idea, but it can actually have some benefits. From earning rewards points to improving your credit score, there are several reasons why you may want to consider paying your mortgage with a credit card.
In this article, we’ll discuss the process of paying your mortgage with a credit card and the potential benefits and drawbacks. We’ll also provide some tips on how to make the most out of this payment method.
Can You Pay Your Mortgage With A Credit Card?
The short answer is yes, you can pay your mortgage with a credit card. However, it’s not as simple as just swiping your card at the bank. There are a few steps you need to take in order to make this payment method work.
Step 1: Check With Your Lender
Before you start making plans to pay your mortgage with a credit card, it’s important to check with your lender first. Some lenders may not allow credit card payments, while others may charge a fee for this type of payment.
It’s also important to note that if your lender does allow credit card payments, they may only accept certain types of credit cards. For example, they may only accept Visa or Mastercard, but not American Express.
Step 2: Set Up a Third-Party Payment Service
In most cases, you won’t be able to make a direct payment from your credit card to your mortgage lender. Instead, you’ll need to use a third-party payment service, such as Plastiq or Tio.
These services act as a middleman between you and your lender, allowing you to make a credit card payment that is then transferred to your mortgage account. Keep in mind that these services may charge a fee for their services, so be sure to factor that into your decision.
Step 3: Make Your Payment
Once you have set up a third-party payment service, you can make your mortgage payment using your credit card. Simply enter your mortgage account information and the amount you want to pay, and the payment will be processed.
Benefits of Paying Your Mortgage With A Credit Card
Earn Rewards Points
One of the main benefits of paying your mortgage with a credit card is the potential to earn rewards points. If you have a credit card that offers cash back, travel rewards, or other perks, you can earn points or cash back on your mortgage payments.
This can be especially beneficial if you have a large mortgage payment, as it can help you earn more rewards points than you would with smaller purchases.
Improve Your Credit Score
Another potential benefit of paying your mortgage with a credit card is the impact it can have on your credit score. By making consistent, on-time payments with your credit card, you can improve your credit score over time.
However, it’s important to note that this only works if you pay off your credit card balance in full each month. If you carry a balance and accrue interest, it can actually have a negative impact on your credit score.
Take Advantage of Introductory Offers
If you have a new credit card with an introductory offer, paying your mortgage with it can help you take advantage of that offer. For example, if your credit card offers 0% APR for the first 12 months, you can pay your mortgage with it and avoid paying interest on that payment for the first year.
Drawbacks of Paying Your Mortgage With A Credit Card
Fees
As mentioned earlier, some third-party payment services may charge a fee for processing your credit card payment. This fee can range from 2-3% of the total payment amount, which can add up over time.
It’s important to weigh the potential rewards and benefits against the fees to determine if paying your mortgage with a credit card is worth it for you.
Interest Rates
If you don’t pay off your credit card balance in full each month, you will accrue interest on your mortgage payment. This can quickly add up and negate any potential rewards or benefits you may have earned.
It’s important to only use this payment method if you are able to pay off your credit card balance in full each month.
Potential Damage to Credit Score
While paying your mortgage with a credit card can potentially improve your credit score, it can also have the opposite effect if you are not careful. If you miss a payment or carry a balance and accrue interest, it can have a negative impact on your credit score.
It’s important to make sure you are able to make consistent, on-time payments and pay off your credit card balance in full each month to avoid any negative impact on your credit score.
Tips for Making the Most Out of Paying Your Mortgage With A Credit Card
Use a Credit Card With Rewards
To make the most out of paying your mortgage with a credit card, use a credit card that offers rewards points or cash back. This way, you can earn something back for your mortgage payments.
Pay Off Your Balance in Full Each Month
To avoid accruing interest and potentially damaging your credit score, make sure you pay off your credit card balance in full each month. This will also help you avoid any fees from third-party payment services.
Keep Track of Your Spending
It’s important to keep track of your spending and make sure you are not overspending just to earn rewards points. Stick to your budget and only use this payment method if it makes financial sense for you.
Conclusion
Paying your mortgage with a credit card can have its benefits, but it’s important to weigh the potential rewards against the fees and potential drawbacks. Make sure to check with your lender and use a third-party payment service to make your payments. And remember to pay off your credit card balance in full each month to avoid accruing interest and potentially damaging your credit score.
By following these tips and using this payment method responsibly, you can make the most out of paying your mortgage with a credit card.
For more information, visit Apzo Media
