It is your credit card and it is your mortgage. You would think it would be no sweat to use the former to pay the latter — and rake on that cost credit card rewards . But that’s not the case. Read complete article if you are looking for How To Pay Mortgage With Credit Card?
In actuality, it a stretch to find businesses that accept payments. Whether you’ve got the option to cover your mortgage by credit card is dependent upon many factors, including the conditions of the card issuer, your mortgage lender and your credit card network — Visa, Mastercard, American Express or Discover.
A few third-party services allow you to get around some of the roadblocks for a fee, but it is only worthwhile if you stand to gain more in rewards than you will cough up in money. You will want to think through if it is the perfect move.
How To Pay Mortgage With Credit Card
It appears that the stars need to align so that you may make a mortgage payment. Your card system, your card issuer and your mortgage lender all must provide the green light to get a mortgage payment to go through successfully. Each party has its own rules.
By way of instance, Visa enables mortgage lenders to take Visa prepaid and debit card payments; Mastercard allows using credit and debit cards for mortgage payments.
However, some credit card issuers do not allow mortgage payments. Bank of America credit cards can’t be used to cover a mortgage. Wells Fargo credit card holders may have more luck; their cards may be used to pay a mortgage so long as the mortgage lender takes them.
Needless to say, not all mortgage lenders do, but they may be more inclined to accept your payment if it is processed by a third party payment service provider. (More on that in a bit.)
It is best to test with all three parties — card network, the card issuer, mortgage lender — to make sure that your payment will process. Otherwise, the chance of a late run or diminished mortgage payment.
Third-party choices for paying a mortgage with a credit card
If you’re having difficulty getting your credit card approved for mortgage payments, you might still have the choice of a third-party payment services.
1 such company, Plastiq, eases mortgage payments using a Discover or Mastercard credit card. Visa and American Express do not now allow mortgage payments through Plastiq, based on Landon Howell, head of marketing at Plastiq.
You cover Plastiq a fee equaling 2.5percent of your mortgage payment each time you use your credit card. Plastics then delivers an electronic payment if the creditor accepts it, or it blows off the mortgage lender a check, eliminating the need for all three firms to approve the trade.
You set up automatic payments or can pay. You also have the choice of creating a one-time payment.
Factors to consider when paying a mortgage with a credit card
Even if you’re able to find a way to cover your mortgage using a credit card, it might not be worthwhile for your finances, your charge or both. There are several factors to consider before choosing this option:
FEES VS. REWARDS
It is tempting to cover your mortgage using a credit card if it means you may earn rewards on this typically substantial bill. But the price of a third party processing fee can remove your earnings. For those who have a mortgage payment of $2,500, and you are paying a 2.5% processing fee, that is $62.50 each moment.
Credit card reward rates vary by issuer, but it is rare that they exceed the cost of such a fee. One exception is a charge card’s signup bonus. If placing a one-time mortgage payment on your card will help you satisfy a minimum spending requirement for a lavish bonus which far exceeds the fee, it might make sense.
The Expense of INTEREST
Placing your mortgage payment on a credit card could lead to costly interest charges in the event you do not pay your credit card bill off in full each month. The long-term cost of carrying large ongoing balances would easily wipe out any benefits you could earn.
AFFECT ON YOUR CREDIT SCORES
Creating a mortgage payment with your credit card will probably take up a substantial amount of your credit limit and raise your credit utilization ratio, your total debt compared with your overall credit limits. This figure has a substantial influence on your credit scores, and ideally you would like to maintain the ratio low, generally 30 percent or lower. A mortgage payment reaching into the thousands of dollars will not help.
A mortgage payment reaching into the tens of thousands of dollars will not help your credit utilization ratio.
Take an example: Suppose you have a $10,000 limit on the credit card you need to use to cover your mortgage. Let us say that you currently have a balance of $2,000 on this card, and your mortgage payment is $2,500. Placing that payment on your card will push your credit use to 45%. Add more trades, along with your credit usage keeps climbing.
If you are intending to make mortgage payments with your credit card, consider asking a credit limit increase from the issuer to reduce the influence on your credit ratings.
If you pay your mortgage using a credit card?
If you are able to navigate the waters to make it feasible, paying your mortgage with a credit card is an alternative, assuming the benefits outweigh the fee. So long as it will not damage your credit and your finances, it is worth considering.
But if you are already using a huge chunk of your credit limit, or if you’re tight on cash for bills this month, placing your mortgage on a charge card is not the best idea. It could damage your credit scores and end up further straining your budget over the long run if you don’t pay your credit card bill off in full.