The Answer is maybe –But it might not be so easy or advisable. Although, not everyone can pay their mortgage with a credit card. Having the option depends on your credit card issuer, your mortgage lender, and your card’s network.
Consider The Potential Costs And Drawbacks First Before Going Through This Process.
It may be possible to make a mortgage payment with a credit card, but you can’t just “put it on your card” like a regular purchase. Instead, you’ll need to go through a third-party service that charges your card, and then sends a check to the mortgage company. The service will charge a fee for doing this so be alert in this matter while you consider it.
Some important points are given below that help you to reach your best decisions:
- Find a payment service that accepts credit cards. These services charge your card, and then send a check to your mortgage company. One Platform is PLASTIQ.
- Verify that your credit card will allow you to make a mortgage payment. With PLASTIQ, for example, Visa and American Express cards can’t be used for the purpose of mortgage payments.
- Set up your mortgage payment through the service. A fee will be tacked onto the amount of your mortgage payment and will appear on your bill.
- Pay your credit card bill in Full Amount as soon as possible because the interest levied on this is already a big chunk of your mortgage payment. Putting the payment on your credit card can mean paying interest on that interest.
Must-Know OR Keep Key Takeaways:
- Mortgage companies generally do not let you pay mortgage bills directly with a credit card. Meanwhile, some credit card companies do not allow mortgage payments on their cards.
- You may be able to get around restrictions by using a payment service that charges your credit card and then sends a check to your mortgage company.
- Using a payment service will result in fees, which will probably more than eat up the value of any rewards you might earn.
How To Pay Your Mortgage With A Credit Card:
A third-party payment service like Plastiq facilitates mortgage payments with a Discover or MasterCard credit card. But Visa and American Express don’t currently allow such types of mortgage payments through this service.
While doing so or by using this platform you have to pay on Plastiq Financial platform as a fee equaling 2.85% of your mortgage payment every time you use your credit card. Plastiq then delivers an electronic payment if the lender accepts it, or it cuts the mortgage lender a check, eliminating the need for all three parties:-
[i.] The mortgage lender.
[ii.] The credit card issuer and
[iii.]The credit card payment network such as Visa, MasterCard, etc. for the approval of such transactions.
You can pay manually this way or set up automatic payments. You also have the option of making a one-time payment.
Ideally, you then turn around and immediately pay back your credit card for the amount of the mortgage payment plus the processing fee. If you made the transaction with an eligible rewards credit card, you’ll earn rewards as you would with any other purchase.
Factors Must Be Taken Into Account While Paying A Mortgage With A Credit Card:
Even if you can find a way to pay your mortgage with a credit card, it may not be worth it for your budget, your credit, or both.
There are several factors you have to consider before choosing this platform payment option:
Fees VS Rewards:
As we know to pay your mortgage with a credit card means that you could earn rewards on that typical bill. But in return, the cost of a third-party processing fee can vanish from your total earnings. Suppose you have a mortgage payment of $5000, and you are paying a 2.85% processing fee, that’s $142.50 each time.
Credit card reward rates also vary by issuer, but it’s rare that they exceed the cost of such a fee. One exception is a credit card’s sign-up bonus. But if you put a one-time mortgage payment on your card this would help you meet a minimum spending requirement for a lavish bonus that far exceeds the fee and hence it could make sense.
The Cost Of Interest:
Putting your mortgage payment on a credit card can result in costly interest charges if you don’t pay your credit card bill off in full every month. The long-term expense of carrying large ongoing balances would easily wipe out any rewards you might earn.
Effect On Your Credit/Cibil Scores:
As we know that making a mortgage payment with your credit card will likely take up a significant amount of your credit limit and increase your credit utilization ratio, your total debt compared with your total credit limits. This figure has a significant impact on your credit scores, and ideally if you want to keep the ratio low, generally 30% or lower. A mortgage payment reaching into the thousands of dollars won’t help.
So just remember “A mortgage payment reaching into the thousands of dollars won’t help your credit utilization ratio.”
Take an example: Suppose you have a $5,000 limit on the credit card you want to use to pay your mortgage loan. Let’s say that you already have a balance of $1,000 on that card and that your mortgage payment is $1,250. Putting that payment on your card could push your credit utilization to 45%. Add more transactions, and your credit utilization keeps climbing.
If you’re planning to make mortgage payments with your credit card, consider requesting a credit limit increase from your issuer to minimize the impact on your credit scores.
Obstacles To Paying A Mortgage With A Credit Card:
Your card network, your card issuer, and your mortgage lender all have to give the green light for a mortgage payment to go through successfully. Each party has its own rules.
As an example, Visa allows mortgage lenders to accept Visa debit and prepaid card payments, MasterCard also allows the use of debit and credit cards for mortgage payments.
But some credit card issuers don’t allow mortgage payments like Bank of America credit cards, for instance, cannot be used to pay a mortgage. Wells Fargo credit card holders may have a good chance because their cards can be used to pay a mortgage as long as the mortgage lender accepts them.
Of course, not all mortgage lenders do, but they might be more willing to accept your payment if it’s processed by a third-party payment service provider such as Plastiq.
It’s best to check with all three parties i.e. card network, card issuer, and mortgage lender — to ensure your payment will process or not otherwise, you may run the risk of a late or declined mortgage payment.
What Is Plastiq And How Does It Work?
For a fee matter, Plastiq lets you use debit or credit cards to pay bills that don’t typically accept cards as payment.
“Plastiq is a service that lets individuals and businesses use debit or credit cards to pay vendors that don’t otherwise accept those payment methods.”
In exchange for this service or benefits, Plastiq Platform charges you a processing fee, which can be expensive–as of August 2021, it was 2.85% for credit cards and 1% for debit cards. And of course, if you’re using a credit card and can’t pay those bills off each month, you’ll incur interest at whatever ongoing rate your card charges.
But if you need some breathing room as you wait for a paycheck or windfall to arrive, Plastiq could be cheaper than a high-interest option like a cash advance OR payday loan — assuming you can pay the bill off quickly, and especially if you use a rewards credit card that can defray the processing fee.
PLASTIQ: The Fundamental Basics:
Plastiq facilitates one-time or recurring payments for bills such as rent mortgage, utilities, daycare, homeowner’s association fees, and other expenses. You add a debit or credit card to your Plastiq account and charge it in the amount of the bill, and then Plastiq pays the company on your behalf via a method that the vendor accepts–ACH, Wire Transfer, or an old-fashioned paper check. The recipient does not need a Plastiq account to accept payments.
As per T & C Plastiq generally charges a 1% processing fee for debit cards and a 2.85% fee for credit cards. The service is compatible with the following Financial Clients:
- American Express.
However, some credit cards have restrictions on the types of bills you can pay via Plastiq. For example, Visa and American Express cannot be used to make mortgage payments through the bill pay service.
Chase recently unveiled a new and expanded definition of cash-like transactions, and it’s unclear what implications that may have for transactions processed with a Chase card through Plastiq.
How The Plastiq Financial Platform Works:
Start by creating a free account with Plastiq and adding your debit or credit card information. You can add multiple cards and select one as your default.
You’ll also need to add recipients, including vendor name and country. All information data will be saved in your account for future use.
To send a payment, select the recipient, the amount owed, and the recipient’s preferred payment method –ACH, Wire Transfer, or Check) and a date for the funds to arrive. You may also need specific details about the bill you’re paying, including, for example, a loan number for the mortgage, a unit number for rent due on an apartment, etc. You can add more details in the “memo” section.
You can make a one-time payment or set them up to repeat automatically. For recipients that accept only checks via snail mail, you may have to submit the payment earlier than usual basis. “Checks typically take eight days to arrive, according to Plastiq’s website, so build in some padding on the calendar to avoid paying late.”
Plastiq provides a breakdown of fees, in the form of dollars and a percentage rate, on the payment review screen prior to completing your transaction. Once you tell Plastiq to send the payment, you’ll receive multiple email confirmations from the company along the way, including a confirmation of the initial transaction, a notice when a check is physically mailed to the vendor for the payment and a message once the recipient cashes it. (If for some reason your payment cannot be processed, Plastiq Platform will notify you.)
NOTE:-Some credit cards may not be compatible with third-party bill payment services. Before using one, read your card’s terms and conditions, or ask the issuer how (or whether) the payment will be processed or not. It might be treated as a cash advance instead of a purchase. Plastiq says that it notifies customers and blocks payments before they are processed as cash advances.
CONCLUSION: It’s your credit card and it’s your mortgage. You’d think it’d be no sweat to use the former to cover the latter as long as the bill gets paid — perhaps to rake in credit card rewards on that hefty expense or to buy some time to cover your house payment if you’re short on money. But that’s not always the case.
In fact, it’s generally a stretch to find companies that accept debt-for-debt payments. Whether you have the option to pay your mortgage by a credit card depends on several factors, including the terms of the card issuer, your mortgage lender, and your credit card’s network — Visa, MasterCard, American Express, or Discover.
If you think that paying your mortgage with a credit card is an option, assume the rewards outweigh the fee. As long as it won’t hurt your credit and well your budget, it’s worth considering.
But if you are already using a large chunk of your credit limit, or if you’re tight on money for bills this month, putting your mortgage on a credit card isn’t the best idea. It could hurt your credit scores and end up further straining your budget over the long term if you don’t pay your credit card bill off in full.
A third-party service like the PLATIQ PLATFORM is a service best used strategically and may let you get around some of the roadblocks for a fee, but you’ll want to think through whether it’s the right move.
But using it to pay bills you can’t afford in the first place will be costly and unsustainable once revolving credit card interest kicks in.