How To Pay Mortgage With Credit Card: It is both your credit card and your mortgage. It would seem no problem to use the former to pay the latter – and rack up credit card rewards at the same time. Unfortunately, this is not the case. If you are looking for How To Pay Mortgage With Credit Card, please read the complete article.
In reality, it is difficult to find businesses that accept payments. It depends on several factors such as the terms of your credit card issuer, your mortgage lender, and your credit card network – Visa, Mastercard, American Express, or Discover – as to whether you can use your credit card to pay your mortgage.
Several third-party services allow you to bypass some of the roadblocks for a fee, but it is only worthwhile if you gain more from it than you spend. Take the time to consider whether this is the best option.
How To Pay Mortgage With Credit Card
- 1 How To Pay Mortgage With Credit Card
There seems to be a need for the stars to align for you to make a mortgage payment. For a mortgage payment to be successful, your card system, your card issuer, and your mortgage lender must all provide the green light. Everyone has their own rules.
For instance, Visa allows mortgage lenders to accept Visa prepaid and debit card payments; Mastercard allows credit and debit card payments on mortgages.
Some credit card issuers, however, do not allow mortgage payments. You can’t use Bank of America credit cards to cover a mortgage. Credit card holders of Wells Fargo may have more luck, as long as the mortgage lender accepts their cards.
There is no doubt that not all mortgage lenders accept third-party payments, but they may be more inclined to accept them if they are processed by a third party. I’ll explain.
To make sure that your payment will process, you should test with all three parties – the card network, the card issuer, and your mortgage lender. If not, you run the risk of a late run or reduced payment.
Third-party choices for paying a mortgage with a credit card
You may still be able to use a third-party payment service if your credit card isn’t approved for mortgage payments.
Plastiq is one such company that makes mortgage payments easier with a Discover or Mastercard credit card. Plastiq’s head of marketing, Landon Howell, said American Express and Visa no longer accept mortgage payments through the company.
Each time you use your credit card, Plastiq charges you a fee equal to 2.5percent of your mortgage payment. It then delivers an electronic payment to the creditor or sends a check to the mortgage lender, eliminating the need for all three firms to approve the transaction.
Automatic payments can be set up or you can pay. There is also the option to create one-time payments.
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Factors to consider when paying a mortgage with a credit card
Using a credit card to cover your mortgage might not be worthwhile for your finances, your charge, or both. Before using this option, consider the following:
FEES VS. REWARDS
It may be tempting to pay your mortgage with a credit card if you are earning rewards on such a large bill. However, fees charged by third parties can remove your earnings. The cost of a $2,500 mortgage payment, plus a 2.5% processing fee, is $62.50 per month.
Reward rates vary by issuer, but it is rare for them to exceed the cost of the fee. Sign-up bonuses for charge cards are an exception. It might make sense if you place a one-time mortgage payment on your credit card in order to fulfill the minimum spending requirement for a bonus that outweighs the fee
The Expense of INTEREST
You may be subject to high interest charges if you fail to pay off your credit card bill in full each month if you put your mortgage payment on a credit card. Carrying large ongoing balances would easily wipe out any benefits you might earn in the long run.
EFFECT ON YOUR CREDIT SCORES
The mortgage payment you make with your credit card could consume a large amount of your credit limit and raise your credit utilization ratio. A low ratio, generally 30 percent or less, is ideal, since it has a substantial effect on your credit scores. Large mortgage payments do not help.
Your credit utilization ratio won’t be improved by mortgage payments in the tens of thousands of dollars.
Say, for instance, you need to pay your mortgage using a credit card with a $10,000 limit. Let’s say you owe $2,000 on this card, and your mortgage payment is $2,000. With that payment on your card, your credit use will increase to 45%. If you add more trades, it will increase even further.
Consider requesting a credit limit increase from the issuer to reduce the impact on your credit rating if you intend to make mortgage payments with your credit card.
If you pay your mortgage using a credit card?
Paying your mortgage with a credit card is an option if you are able to navigate the waters. If it won’t harm your credit or finances, it’s worth considering.
Place your mortgage on a credit card if you are already using a large portion of your credit limit, or if you have difficulty paying your bills this month. If you don’t pay your credit card bill in full, it may harm your credit scores and further strain your budget.