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If you want to pay your mortgage with a credit card directly, you may have to jump through a few hoops. While mortgage loan servicers don't accept credit cards directly, there are third-party services and workarounds you may be able to use. Even when it is possible, however, the fees and high interest rates may make using a credit card a poor option.
How to Pay Your Mortgage With a Credit Card
There are four primary ways you can try to use your credit card to pay your mortgage.
- Use a third-party service. Some services act as a middleman by accepting your credit card payment, then sending a check or ACH transfer on your behalf. While these are more commonly used for paying rent than mortgages, some companies (such as Plastiq) accept certain cards for mortgage payments. Plastiq charges a 2.85% transaction fee for each payment, and only accepts payment via Mastercard or Discover credit cards from select card issuers.
- Buy a money order. You also might be able to buy a money order with your credit card and deposit it at your bank or send it to your mortgage servicer. However, money orders often have a $1,000 limit, and there may be a fee for each one you buy. Many merchants also don't accept credit cards for money orders, and some card issuers might treat the transaction as a cash advance, which can be costly.
- Transfer a balance to your bank account. Some credit cards let you use a balance transfer to move money into your bank account. You could then make the payment from your account as you normally would. The card issuer typically charges a balance transfer fee (3% or 5% is common), and the balance can accrue interest based on your card's balance transfer annual percentage rate (APR).
- Get a cash advance. Another option could be to take out a cash advance with your credit card. You could then use the cash to buy a money order or cashier's check. Or, deposit it and pay by check or electronic transfer. There may be a cash advance fee, and the advance often starts accruing interest right away. Furthermore, your cash advance limit may be lower than your credit limit.
Although all four options listed above present a potential way to use your credit card, that doesn't necessarily mean doing so is a good idea.
Should You Pay Your Mortgage With a Credit Card?
There are two reasons people generally want to use a credit card to pay their mortgage: Either they want to earn credit card rewards, or they can't afford the mortgage payment.
But before you use a credit card, consider:
- Fees: Third-party services and retailers that sell money orders may charge you fees. Additionally, your credit card may have fees for balance transfers and cash advances—which sometimes apply to cash-like purchases like money orders. These fees may seem insignificant at first but can easily snowball if you wind up paying them every month.
- Interest: Your purchases and balance transfers may accrue interest if you can't pay off your balance in full each month. Cash advances may have a separate, higher interest that starts to accrue right away.
- The card's rewards: If you were planning on using your mortgage payments as an easy way to earn credit card rewards, you're likely out of luck. In many cases, the fees you pay will drastically outweigh what you can earn in rewards—if you'll earn rewards at all.
- Promotional interest rate offers: You may be able to temporarily avoid accruing interest on purchases or balance transfers if your card has a promotional 0% APR offer. Be sure to read the terms closely, though, and make sure you can pay off the balance by the end of the promotional period.
- The effect on your credit score: A high balance on your credit card could lead to a high credit utilization ratio that hurts your credit scores. You may be able to avoid this by paying off the balance before the end of your statement period. If you're going to carry the balance, its impact on your credit score could limit your borrowing options later.
The high fees and other downsides of making mortgage payments with a credit card mean it's a bad idea for most people. If you're trying to avoid missing a mortgage payment, using a credit card as a strategic stop-gap might be an option, but you'll want to exhaust your other options first. Otherwise, you could wind up with a lot of high-interest debt.
Alternatives to Using a Credit Card for Your Mortgage
If you're struggling to afford your mortgage payment, you may be eligible for various relief and assistance programs. You could try to:
- Contact your mortgage servicer before you miss a payment. Share that you're struggling to afford your payments and whether you expect it to be a short- or long-term issue. The mortgage servicer might be able to temporarily offer a temporary repayment plan with a lower monthly payment or a mortgage modification if you experienced a significant hardship.
- Look into mortgage forbearance. The mortgage servicer may also discuss putting your mortgage into forbearance. Doing so could let you temporarily reduce or stop making your mortgage payments.
- Get help from a housing counselor. You can use the Consumer Financial Protection Bureau's housing counselor tool or call the Homeowners HOPE Hotline. A housing counselor may be able to suggest different options you can use to stay in your home.
Mortgage lenders often don't want to foreclose on a home and are willing to work with a borrower to avoid this outcome. There may be a cost to some of these programs or options, but they're likely much cheaper than the fees and interest you'll accrue if you start using your credit card to pay your mortgage every month.
Monitor Your Credit Report and Score
It's also a good idea to continually monitor your credit while you're repaying your mortgage. If you have a good payment history and high credit score, you may be able to refinance your mortgage to lower your interest rate, decrease your monthly payment or get cash out. You can check your Experian credit report for free and sign up for free FICO® Score☉ monitoring.