It is hard to pay your mortgage on a credit card. Your card’s network and issuer must allow it. Further, your lender must accept it. Getting all three to agree almost never happens. You can use a third-party service to accept and then pay your home loan, but for a fee.
- It is hard to pay this way because financial institutions do not want anyone substituting one type of debt with another.
- Third-party services will pay your home loan for a fee.
- There are some advantages but also big disadvantages to using unsecured debt to pay your mortgage.
- It never makes sense to buy a house with unsecured debt.
There are some cases where it makes sense to pay your loan with a bank card. However, never carry a balance, and don’t consider it at all if you are behind or in danger of not making your payment.
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Why Can’t You Pay Your Mortgage on a Credit Card?
You may be able to pay your mortgage with a credit card, but banks make it difficult. The reason is they do not want you to substitute one debt with another. This may seem like a philosophical answer, but it is practical. If you cannot cover your debt without going into more, you will get into big trouble sooner, rather than later. There are practical reasons to pay your home loan with plastic, especially if you have the discipline to settle the balance at the end of the month. However, banks know that many people won’t be responsible, and piling one debt on another is disastrous for the borrower and the bank. Therefore, they put up roadblocks to dissuade borrowers from using their unsecured debt.
- Not all networks allow you to settle your mortgage with plastic.
- Card issuers often won’t allow you to pay your mortgage this way.
- Your lender probably won’t accept any form of debt to pay your loan.
It’s possible, but it is very hard. Few banks have even fewer options. Even fewer lenders will accept those payments. There are third party providers that will charge your card and then settle with your mortgage company, but their fees are often high. Therefore, even if you can do it, it doesn’t make sense.
How Can You Pay Your Mortgage on a Credit Card Without a Fee?
You cannot pay your mortgage with a credit card without a fee. The reason is interchange fees. Banks always charge these, and you rarely see them because businesses usually cover them. Your lender will not, though. That means that if you want to use plastic, you must pay for it.
Third-Party Services
Third-party services that allow you to pay your home loan with your bank card do exist. Payment providers include1
| Company | Debit | Credit | ACH | Cards Accepted |
|---|---|---|---|---|
| Plastiq | 1% | 2.5% | N/A | AMEX, Discover, Mastercard, Visa, JCP, Diners Club, pre-paid, and gift cards. |
| Radpad | $4.95 < $5,000; $9.95 > $5,000 | 2.99% | Free | AMEX, Discover, Mastercard, Visa, Apple Pay |
| PlacePay | 2.99% | 2.99% | $1.95 | AMEX, Discover, Mastercard, Visa |
| Rent Moola | $6.99; Prepaid – 2.99% | Visa/Mastercard – 2.99% AMEX – 3.99% | N/A | AMEX, Mastercard, Visa, |
| Venmo | Free | 3% | N/A | Discover, Mastercard, Visa, |
Which Networks Allow Direct Mortgage Payments
There are four major credit card networks, American Express, Discover, Mastercard, and Visa. Each has its own rules about home loan payments.
- American Express – Does not allow direct payments.
- Visa – Allows payments with prepaid and debit cards, but not credit cards.
- Discover – Does not allow direct payments.
- Mastercard – Allows payments with both.
Even if your network allows it, your provider and/or lender may not.2
Pay Mortgage on a Credit Card: Pros and Cons
While banks make it difficult to pay your home loan with a debt instrument, there may be advantages in some cases. However, there are strong disadvantages as well. Some cases where it makes sense include:
- Your card earns more than 2.5% rewards.
- There is a big signup bonus.
- You are close to achieving elite status with your provider.
You should also consider the disadvantages and risks associated with paying one debt with another:
- There is at least a 2.5% transaction fee depending on which service you use.
- Payments can take up to eight business days.
- Your issuer’s terms can change often.
Your issuer can change definitions, such as coding the transaction as a cash advance, and charge more and/or higher fees. Beyond that, never do this if you are behind or to keep yourself from missing a payment.3
Can You Buy a House with a Credit Card for Points?
You cannot buy a house directly with a credit card because title companies handle the funds of the transaction and only accept certified funds. The only way you could is if you get a cash advance and doing that is expensive. Here is why:
- Your issuer charges a withdrawal fee, usually 5%.
- Interest rates on unsecured debt are very high, much higher than on secured loans.
- Interest rates on cash advances are higher than on normal transactions, and it starts to accrue the day you borrow the money.
- You may not be able to borrow enough, because the cash advance limit is always lower than the credit limit.
To even consider this you must have excellent credit, or else you won’t be able to borrow enough. The fees and interest on the cash advance would surely be more than any points you would earn from the transaction. So, there is never a situation where it will help you to buy a house with your credit card, no matter how many points you earn.4
Final Thoughts on Pay Your Mortgage on a Credit Card
While it is very hard to do this, you can. Sometimes it may even make sense. Banks make it hard, though, because it is dangerous financially. Unless you have excellent rewards or a big signup bonus you should never consider this.
If you are behind on your mortgage or you think this is the only way to stay current, don’t do this. Call your bank for other options or a financial counselor to help. Paying one debt with another is never a good idea if you do not have the money to cover it.
