If you’re trying to think of different ways you can rack up credit card rewards, you may have wondered how to pay your mortgage with a credit card. After all, that’s probably your biggest monthly expense, and you’re going to have it for years to come.
While it’s possible to pay your mortgage with a credit card, it can get a little complicated and expensive, and it’s not always advisable.
Read on to learn what options you have and how to know if it’s worth it.
How to pay your mortgage with a credit card
“It’s not common for lenders to allow you to make your mortgage payment with a credit card,” says Patti Geroulis, a credit card rewards expert at The Travel Sisters. “Most do not offer that option.”
There are, however, ways to get around that fact, including third-party services and what Geroulis calls “manufactured spending.”
“There’s at least one third-party service that allows you to pay your mortgage with a credit card,” says Geroulis. “And that’s Plastiq.”
Plastiq is a service that allows you pay your mortgage and other bills with a credit card. The caveat is that there’s a flat fee of 2.5% for each transaction.
Depending on the card you have, though, it could be worth it. For example, the Discover it® Miles card offers 1.5 miles per dollar spent but doubles your miles for the first year.
So, you’re essentially getting 3% back and paying 2.5%, giving you a profit of 0.5%. That’s not a lot — $7.50 for a $1,500 mortgage payment — so it may not be worth the effort. But a profit is a profit.
But if your credit card earns less than 2.5%, you’d be paying more than you’d get back in rewards, so it’s never worth it to use Plastiq in this case unless you’re working on meeting the minimum spending requirement for a sign-up bonus.
“Another pitfall is the length of time that it takes for the lender to receive your payment,” says Geroulis. “Depending on the payee, sometimes Plastiq sends payments electronically and sometimes by check which takes longer.
If paying your mortgage with Plastiq, you need to schedule your payment early enough that the bank receives it by the due date.”
Manufactured spending is essentially the process of turning credit card spending into cash, which you can turn around and use to pay off the credit card. The most popular way to do this is to use your credit card to buy a Visa or Mastercard gift card.
Here’s how that works:
- Buy a Visa or Mastercard gift card with your credit card, usually with a fee around $5 or $6 per card.
- Use that card as a debit card to buy a money order at a retailer or the post office, usually with a fee of $1 or less.
- Deposit the money order in the bank or take it to the bank to pay your mortgage.
- Pay off the credit card before the due date to avoid interest.
The problem with this method is that it can be tricky. For example, some retailers don’t allow you to buy money orders with a gift card, and some may limit how much you can buy.
Also, while this process isn’t illegal, it can raise red flags at the bank if you do it frequently. For example, one credit card rewards expert was detained by the police for high-volume manufactured spending.
It’s also important to note that doing this is against the terms of your credit card agreement. Your credit card company could technically close down your account if it senses what you’re doing.
So, only do this if you feel comfortable understanding the pitfalls.
Other monthly payments
Your mortgage isn’t the only monthly payment you may want to pay with a credit card. Here are a few others you might be wondering about.
Can I use a credit card to pay my student loans?
There are no student loan servicers that we know of that take credit cards for your monthly payment. You can use Geroulis’ idea about buying gift cards and converting them to money orders.
But that strategy typically isn’t as beneficial with small amounts, so it might not be worth it for your student loan payment.
Can you pay your utility bill with a credit card?
Most utility companies allow you to use a credit card to make your monthly payment. But some, especially smaller companies, may charge you a fee.
If this is the case, the fee is normally more than you’d earn in rewards from making the payment. So, it’s likely not worth it. But check with each of your utility companies to see if you can make fee-free credit card payments.
Can you use a credit card to pay your rent?
It depends on your landlord and which service they use to take payments. Some may take credit cards for a fee, and you may even be able to drive down that fee percentage by paying more than one month at a time.
You can also use a third-party company like Plastiq to make your payments, but those fees are a flat percentage and more than you’d get in rewards.
If you’re lucky, your landlord will use a property management company that allows you to make credit card payments for free. But this is a rare occurrence.
The bottom line
“Overall, using a credit card to earn points for paying your mortgage is only worth it if the rewards earned outweigh the fee,” says Geroulis. So, it’s important to take a moment to do the math before jumping on an opportunity.
For example, if you’re working on a $500 sign-up bonus with your travel credit card, paying 2.5% on a $1,500 mortgage payment ($37.50) isn’t a big deal. But if you’re not working on a sign-up bonus and your rewards rate is 2%, you’re paying $37.50 to get $30 back, which doesn’t work in your favor.
If you’re interested in trying it out, check out some of the top credit cards to see if you can score enough rewards to make it worth the cost.
Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.