Pacific Debt Relief Program

Can You Pay Your Mortgage With A Credit Card?

Jul 25, 2019

Last Updated: March 25, 2024


Alternatives for Struggling Homeowners

Alternatives for Struggling Homeowners: Assistance Programs and Refinancing

In the quest to maximize financial flexibility and rewards, many homeowners wonder if it's possible to pay their mortgage with a credit card.


While the concept presents enticing benefits, such as accruing rewards points or cashback, it's navigated by complex waters of financial terms, potential fees, and strategic considerations.


This guide provides a clear pathway for those contemplating this method, alongside essential cautions and alternative strategies for managing your mortgage payments more effectively.


Want to skip the article and speak directly to a debt specialist? Click here for a free consultation.


Why Would You Use a Credit Card to Pay Your Mortgage?


You might choose to use your credit card to pay your mortgage for several reasons. One is the rewards you accrue for using your card. Another is if you are temporarily short of cash. However, both situations can put you in a financial bind.


Can I Use a Credit Card to Pay My Mortgage?


It depends on your credit card network, credit card issuer, and mortgage lender. In general, Wells Fargo credit cards can be used as long as the mortgage holder accepts credit card payments. American Express does not allow mortgage payments on their credit cards. Visa allows you to use debit or prepaid credit cards to pay your mortgage.


Mastercard allows you to use either a debit or credit card to pay your mortgage. However, these are NOT cut in stone. Always check with both your credit card network and your credit card issuer. The mortgage lender is the next hurdle. The lender may be willing to accept credit card payments that are processed through a third-party payment service provider.


These third-person providers charge fees, often of 2.5% of the mortgage payment, every time you use the service. Those fees can offset any rewards that you might earn for using your credit card. The other issue is if you don’t pay off your card in full each month. The interest rates and credit card fees will eat up any reward you might get. See our sample below for more details.

Monthly Mortgage Due: $1000
Typical Reward (2%): + $20
Third Party Processing Fee (2.5%): – $25
Average Monthly Interest Rate (1.16%): – $11.16

Using a third-party payment processor, if you don’t pay off your card in full, the $20 in rewards will be eaten up the first month by the processing fee and monthly interest rate.


Before you pay a mortgage using your credit card, contact the card network, the card issuer, and the mortgage lender to make certain that the payment will go through. Otherwise, you’ll end up with late fees and other consequences for late or missing payments.


Should You Pay Your Mortgage with Credit Cards?


The answer, as you’ve probably realized, is no. Except for very specific and well-thought-out reasons, using a credit card to pay your mortgage is generally a bad idea. You stand the risk of running up some very high-interest charges.


Another issue is something called the credit utilization ratio. This is the ratio between debt and credit limit. The higher the ratio, the lower your credit limit and the lower your credit score. This can have a significant impact on your creditworthiness and ability to purchase a car or get a loan. Carrying a large credit card balance from a mortgage payment can hurt your credit score.


Whether paying your mortgage with a credit card makes financial sense depends on if you earn enough rewards to outweigh the fees and interest. For most, the added costs outweigh the rewards earned. For example, if you get less than 3% cashback on payments, this strategy is rarely worthwhile given added fees.

Paying your mortgage with a credit card can also negatively impact your credit score over the long run. If you have to carry a balance and pay interest due to income fluctuations, your credit utilization will spike and your credit score may plummet substantially.


This strategy only works if you can pay off the full credit card balance before interest applies every single month. We do not recommend paying your mortgage with a credit card if your monthly income varies significantly.


My Credit Card Mortgage Debt is Killing Me


If you have gotten yourself into financial difficulties using your credit card to pay your mortgage and you are drowning in debt, Pacific Debt, Inc. may be able to help you. We are a professional debt settlement company that works with people with significant amounts (over $10,000) in credit card debt to help settle their debt.


Alternatives if Struggling with Mortgage Payments

If you are struggling with mortgage payments and considering putting them on a credit card, there may be better options:

  • Hardship Programs: Most lenders offer hardship or forbearance programs if you are going through financial difficulties. These can reduce or suspend payments temporarily. Talk to your lender about qualification requirements.
  • Refinancing Your Mortgage: If your credit is still in decent shape, you may be able to refinance your mortgage at a lower interest rate or switch to a longer term to get lower monthly payments. Read our guide on refinancing with lower payments to learn more.
  • Mortgage Payment Assistance: There are some government and non-profit programs available including loan modifications, which may help by reducing your monthly payment or interest rate.

FAQs

  • Can I use any credit card to pay my mortgage?

    No, most mortgage lenders do not directly accept credit card payments. You would need to use a third-party payment processor like Plastiq, and they currently only support Mastercard and Discover cards. Many cards also treat such payments as cash advances which incur fees and interest.

    For individuals exploring their first home purchase, navigating mortgage payments is just one aspect of the broader financial landscape. Explore our comprehensive guidance on assistance programs for first-time homebuyers, which can offer valuable support for you to gain a better understanding of how to manage your mortgage effectively.

  • What are the fees for paying by credit card?

    If you use a service like Plastiq, you will pay a convenience fee of 2.85% per transaction. This is in addition to any credit card interest or cash advance fees if not paid off in full.

  • Is paying my mortgage by credit card considered a cash advance?

    Maybe. Cash advances don't earn rewards and start accruing interest immediately. Some cards do treat third-party mortgage payments as cash advances, so check your agreement or call your issuer.

  • Can I earn rewards if I pay my mortgage with a credit card?

    Yes, if your card and payment processor allow it and treat it as a purchase rather than a cash advance. Just make sure your rewards earn rate is more than the fees being charged.

  • Will paying my mortgage by credit card improve my credit score?

    It actually may hurt your credit score if it increases your credit utilization significantly or you have to carry a balance and pay interest each month. Pay off your statement balance in full.

  • What if I can't pay off my credit card balance in full?

    We do not recommend paying your mortgage with a credit card unless you can pay off the balance in full every month before interest applies. The interest rates on credit cards are extremely high compared to most mortgages.

Conclusion

Paying your mortgage with a credit card can be done in some cases, but it rarely makes good financial sense. While you may earn some rewards, you need to weigh this against fees from services like Plastic that make the payments possible as well as potential impacts on your credit score.


For most people, the best course of action is to avoid putting essential expenses like housing payments on a credit card altogether. The risks include paying exorbitant interest rates if you carry a balance as well as damage to your credit standing. Paying by credit card should only be considered temporarily if necessary and your income allows you to pay off balances in full each month.



If making mortgage payments is a struggle, you have alternatives like lender hardship programs, mortgage refinancing, and assistance programs to explore first before taking on additional credit card debt. These programs are designed to help borrowers through financial hardships to keep their homes while managing payments.


Pacific Debt Inc.


Pacific Debt, Inc. is one of the leading debt settlement companies in the United States with a national debt relief program. We can help you settle your debt, often for far less than you owe. To be eligible for the Pacific Debt settlement program, you must have more than $10,000 in unsecured debt, and it takes roughly 2 to 4 years to complete our debt relief program.


Pacific Debt, Inc. is accredited with the American Fair Credit Counsel and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.


For more information, contact one of our debt specialists today. The initial consultation is completely free, and a debt expert will explain to you all your options so you can clearly understand them.


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