Your mortgage lender won’t directly accept payments with a credit card. Doing so would allow you to simply exchange one form of debt for another. You may be able to pay your mortgage with a credit card if you go through a payment processing company, but you’ll have to pay a fee.
When It Might Make Sense to Pay Your Mortgage With a Credit Card
You may decide to make one or more mortgage payments using a credit card if your card offers a bonus as a percentage of each purchase and that percentage is greater than the credit card processing fee. Paying your mortgage with credit may also work to your advantage if it will allow you to qualify for a new-customer bonus.
For instance, you may be eligible for a bonus of several hundred dollars or thousands of points if you make purchases that total a specific amount in the first few months after you open an account. You may not be able to reach that total with your typical purchases, but a mortgage payment may get you to the threshold you need to reach to qualify for a bonus. You may also be able to earn airline miles, free hotel stays, and other rewards by paying your home loan with a credit card.
You may be strapped for cash when your mortgage payment is due, but you may know that you’ll have money coming in the next few weeks. If that’s the case, paying your mortgage with a credit card can help you avoid a late fee from your lender.
Reasons to Not Use a Credit Card to Pay Your Mortgage
Your credit score is based in part on your credit utilization ratio, or the percentage of available credit you’re using. Making one or more large mortgage payments with a credit card may cause your utilization ratio to spike and may lower your credit score. That may be less of an issue if your utilization ratio is typically low.
If you’re thinking about paying your mortgage with a credit card as a last-ditch effort to avoid foreclosure, don’t. It will most likely just make your situation worse. You’ll wind up with higher credit card balances, possibly at high interest rates, and the underlying problem that caused you to fall behind on your mortgage won’t be addressed. Contact your lender to discuss payment options and consult a housing counselor to learn about programs that may be able to help you.
Use Caution
Before you use credit to pay your mortgage, check your credit card company’s policies. It may count a payment made through a payment processing company as a cash advance and charge you a high interest rate.
Only pay your mortgage with a credit card if you can pay the balance in full when your credit card bill is due. Otherwise, you’ll incur interest, and the interest rate on the credit card may be much higher than the rate on your mortgage.
