Your mortgage (or your rent) is probably one of the single biggest pieces of your monthly budget. And technically there’s nothing wrong with setting this expense up on an auto-pay plan through your checking account. In fact, if you’re trying to get your finances under control, auto-pay is a great strategy to make sure you never have a late payment.
But if you’re already in control of your financial world, you may want to consider paying your mortgage with a credit card — and here’s why.
Why Use a Credit Card When You Can Write a Check?
I’m a big fan of incorporating credit cards into your financial strategy. That’s because paying with your credit card can help you reap big financial rewards and even get to travel for free! Since your mortgage (or rent) is one of the biggest payments you make each month, it makes sense to use a credit card to maximize the rewards on that payment.
Adding your mortgage payment to your monthly credit card transactions will instantly boost the rewards you earn. However, there is a bit of a strategy to this, so here’s everything you need to know before you start.
Who Should – and Who Shouldn’t – Use a Credit Card for a Mortgage Payment
Ready to take the plunge and maximize your credit card rewards? You’re ready to pay your mortgage with a credit card if:
- You pay your credit card balance in full each and every month
- You have a little extra time before your next mortgage payment. These methods aren’t instantaneous and may require some buffer time, and you don’t want to risk a late payment on your mortgage just for poor planning.
- You have a credit card with awesome rewards and/or cashback, and ideally a sign-up bonus. More on that in a moment.
- You love free stuff!
This strategy isn’t for financial beginners. You may not be ready to pay your mortgage with a credit card if:
- You’re currently working on paying off existing credit card debt. Adding more to your balance, even if you pay it off right away, may not help you very much in the long run.
- You’re not in good standing on your mortgage. Focus on getting your mortgage payments back on track first before trying a strategy like this.
- You’re following Dave Ramsey’s rules. If you think cash is king and credit cards have no place in a financial plan, you’re not going to get very far with this strategy. But if you’re willing to be open-minded and learn how to pay your mortgage with a credit card to maximize the rewards, then read on!
Don’t Forget: Do Your Research
Not all credit cards are created equal. If you’re going to start paying your mortgage with a credit card, it may be beneficial to open up a new card. This is because a new credit card may make you eligible for special bonuses for being a new member. Many will offer extra points or cashback bonuses during the first few months. Any opportunity to jump on those offers will help increase your cashback and/or travel rewards, so don’t overlook them!
What Type of Credit Card is Best?
Here are our recommendations for the best type of credit card to use to pay your mortgage and other large bills:
- $0 annual fee cards. Fees don’t end up getting you a better card in the long run. At the very least, look for a card where the annual fee is waived for the first year.
- Large sign-up bonus. We’re talking at least $150, but many cards offer larger sign-up bonuses, so do your research!
- Referral bonus. Ask around to see if your friends or family members have a card that offers a referral bonus since that’s an easy win-win
- Travel rewards. Cashback rewards are more versatile, but usually cards that offer travel rewards give you a bit more bang for your buck because of special agreements with airlines and hotel chains
What if My Mortgage Company Doesn’t Accept Credit Card Payments?
This is where the strategy comes into play! There are two main ways to pay your mortgage with a credit card, even if your mortgage or rent company doesn’t accept them.
1. Use a payment service like Plastiq
Plastiq is a site that allows you to pay large bills with your credit card. Here’s how it works:
You sign up for a free Plastiq account and add your credit card details. Then you tell Plastiq the details about your mortgage or the other bill(s) you want to pay. Plastiq charges your credit card, and then sends payment on your behalf via a paper check or bank transfer.
One thing to note about Plastiq is that they charge a transaction fee for every payment, up to 2.5%. It doesn’t take a rocket scientist to know that this means that you will end up paying more to pay your bills via Plastiq. However, if you’re chasing a large sign-up bonus, you should crunch the numbers – it might work out in your favor to pay a small transaction fee in return for knowing you’ll hit the spending threshold to get a huge credit card bonus!
2. Money Orders
It may sound old-fashioned, but money orders are nearly always accepted by mortgage lenders as an acceptable form of payment. Here’s how it works:
Use your credit card to by a PIN-enabled gift card. You can find these types of gift cards at most large retailers and even GiftCardMall.com. There’s usually only a small activation fee added to the total cost. Then, use the gift card to purchase a money order. If you’re not sure where to get a money order, try your local grocery store. Some national retailers like CVS don’t allow money order purchases with a PIN-enabled gift card, but many others will accept them with no issue. Make sure the money order covers the amount of your mortgage, and you’re all set to go!
While this strategy takes a few extra steps, it may cost you less money overall than using Plastiq. When you’re chasing a large sign-up bonus though, every little bit counts!
Other Bills You Can Pay With a Credit Card
Your mortgage isn’t the only large bill you can start paying with your credit card. Think about all the other types of payments you make on a regular basis. Your car payment, student loan payment, daycare, health insurance, and utility payments are all great candidates for credit card payment.
And if you’re trying to maximize your credit card rewards, don’t underestimate all the small payments! You can build up more points by using a credit card in places you normally wouldn’t, like the grocery store or gym.
You can also start putting group purchases on a credit card – like lunch for you and a coworker – and ask them to pay you back via Venmo or cash. This will increase the amount of transactions on your credit card without actually increasing the amount you’re spending. Remember, the whole point is to get free money, not spend more!
The Important Detail That Can Either Make or Break Your Plan
The whole point of learning how to pay your mortgage with a credit card is to get a lot of free stuff in return for the spending you’re already doing. However, if you don’t pay your credit card bill in full each month, you can be hit with some intense interest rates. Paying interest on your credit card (or suffering a late fee) is the quickest way to cancel out any of the free rewards you’ve earned.
So the bottom line – the moment you put your mortgage or any other large bill on your card, pay off the card. Don’t wait for the monthly statement to arrive, or take any other risks along the way. Pay immediately, and you’ll always be assured that your rewards were worth it.
