Can you pay your mortgage with a credit card? Maybe. Some lenders allow you to use your card—and some don’t. But the real question is: even if your lender does accept credit cards, is it a smart way to pay?

With lots of red tape and hefty fees, it likely isn’t.

Those points can be tempting, though. That’s why car and homeowners

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Can you pay your mortgage with a credit card?

If you want to pay your mortgage with a credit card, it might be possible. However, many experts warn that the process is neither easy nor wise: most mortgage lenders don’t accept direct credit card payments, and the go-betweens can charge an arm and a leg.

That being said, there are some instances where it might make sense.

Terms of the mortgage lender

Lending institutions that offer mortgages don’t usually accept credit card payments, so you’ll have to find a workaround.

You may wonder why; after all, it’s your credit card and your mortgage, so you should be able to pay how you want. But the banks have good reasons.

First, if mortgage companies were to accept credit cards, they’d have to pay processing fees—typically 1.5% to 3.5% per transaction. So for a monthly mortgage payment of $2,000, the bank might have to pay up to $70 in fees. Multiply that by the thousands of mortgage payments they accept each month, which could add up to a lot of money.

The other, more important, reason is that most banks don’t like the idea of you paying one debt to take on another debt—it just doesn’t bode well for your finances.

Terms of the card issuer

Depending on your credit card issuer, you may have a tough time paying your mortgage. Visa and American Express, for example, don’t allow mortgage payments, even through a third-party service.

It all comes down to financial viability. Many lenders believe—perhaps rightly so—that a borrower who can’t afford to pay their mortgage puts it on a credit card and then gets saddled with 15-20% interest on that credit card will eventually default payments.

This, of course, is not always the case, but lending institutions have to protect themselves from that risk.

MORE:

What type of home insurance is required for a mortgage?

How to pay your mortgage with a credit card

Despite the hurdles, many people still want (or need) to pay their mortgage with a credit card. There are ways.

Third-party payment services

Some third-party services, like

Plastiq

, act as a go-between, allowing you to pay your mortgage and other bills via credit card. You pay them via credit card, then they send an EFT or a check to the mortgage lender.

Pretty straightforward.

Beware, though: there is a 2.85% fee per transaction, and not all cards are accepted. The only credit cards that currently participate are Mastercard, Discover, JCB International, and Diners Club International. So, if you don’t have one of those, you can’t use the service.

Ideally, if you pay this way, you turn around and immediately pay off the credit card you used (including the mortgage payment and any processing fees). This would allow you to earn points but not pay further interest payments.

Key Takeaway If you’re using a credit card because you want to earn points, do the math first. It’s very likely that the fees you pay will be equal to or more than any rewards you’ll earn.

Gift cards

Another option is to get a prepaid credit card or gift card that you can use to move money to your checking account. Many options exist, such as the

American Express Bluebird card

, and this allows you to get around the problem of lenders not accepting credit cards.

You can load the Bluebird card with cash or gift cards, or you can have your paycheck or government funds added via direct deposit, making it easy to pay your mortgage.

Lastly, you can convert prepaid gift cards into money orders, which can then be used to pay your mortgage. This is only recommended if you can go into an actual brick and mortar location to pay; if money orders get lost in the mail, there’s not too much you can do about it.

MORE:

Checklist for first-time homebuyers

What to consider when paying your mortgage with a credit card

As you can see, there is a lot to consider when paying your mortgage with a credit card. It’s essential to keep track of your finances and pay close attention to interest rates and fees, or you could end up much further in debt.

Cost of interest

Paying your

mortgage

with a credit card can result in costly interest charges, especially if you don’t pay off your balance every month. For the most part, taking secured debt at a low interest rate and transferring it to a credit card with a relatively high interest rate just doesn’t make sense.

Fees vs. rewards

You may consider paying your mortgage with a credit card so you can earn rewards: this is usually the wrong move. For the most part, any fees you’ll pay for using a third-party processor will outweigh the rewards you’ll earn.

The only time this works is if you earn more in rewards than you have to pay in fees—for example, you pay 2.85% to Plastiq, but earn 3.2% in credit card rewards. Currently, however, the average credit card reward is just 2.3%.

Effect on your credit score

Generally, having a mortgage and paying it on time is excellent for your credit score. However, paying your mortgage with a credit card can wreak havoc on your finances.

Mortgage payments are not cheap, and adding that much to your credit card balance can negatively impact your

credit

utilization ratio. That’s the ratio of your current debt to your credit card limits, and you want to keep it below 30%.

Likewise, if you wrack up a lot of credit card debt but only make minimum payments, interest charges can quickly get out of control—you could end up paying hundreds of dollars more than the original amount.

Key Takeaway Mortgage payments usually come with low fixed interest rates. Meanwhile, the average interest rate on new credit cards is above 18%.

MORE: Why insurance companies check credit scores

Should you pay your mortgage with a credit card?

In general, no: you should not pay your mortgage with a credit card. However, sometimes you may have no other choice, or the circumstances may make it worthwhile.

One specific time it is worth it is when you have a new credit card offering a substantial sign-on bonus. Say, for instance, your card offers 50,000 points if you spend $3,000 in the first three months: that would be worth it because the bonus will far outweigh any fees.

Just remember: pay your credit card bill in full and on time, so you don’t get hit with crazy interest payments!

Finding affordable home insurance

If homeownership is stretching your budget thin, try shopping for more affordable

home insurance

. The cost of mortgage payments, property taxes, and home repairs are often beyond your control—but insurance is a bit more flexible.

Different companies offer different rates and coverages. By shopping around, you can ensure that you get the best coverage possible for the most reasonable price.

Don’t have the time to do it on your own? Car and homeowners insurance expert

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FAQs

Can you use your credit card to pay a mortgage?

Yes, you can use your credit card to pay a mortgage—as long as you’re willing to put in the work. Unfortunately, you can’t pay your mortgage lender with credit directly, so you must find and use a third-party processor. It can be time-consuming and expensive.

When should I pay my mortgage with a credit card?

You should only pay your mortgage with a credit card when you can ensure that the benefits outweigh the risks. For instance, if the points reward you receive from your credit card will be far greater than any fees you are charged.

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