Paying your mortgage with a credit card
It would be great if you could use a rewards credit card to pay your mortgage each month so you could rack up the points. Or if your mortgage servicer allowed you to pay your mortgage with a credit card when you’re a little short.
However, most mortgage servicers don’t allow this. That’s because their profit margins are very thin, and they can’t absorb the fees the credit card company charges them to receive your payment. Some lenders do allow this, though, usually by issuing you a credit card when you close your mortgage.
Pay your mortgage with a credit card: It’s possible
There are a few ways in which you can use your credit card to pay your mortgage. One is to simply take a cash advance, deposit the money into your checking account, and pay your mortgage with a check or your debit card.
The second way is to enlist the services of a third-party company like Plastiq, which charges your credit card, then pays your mortgage via bank transfer or paper check. However, the fee for this can be as high as 2.5 percent of the payment amount.
Another less-expensive option is AMEX Bluebird, which is an online checking account that allows you to pay any of your bills using their online payment system. It’s free to use and you can load your account (up to $5,000 a month) at Walmart.
Finally, you can purchase VISA pin-enabled gift cards (which act like debit cards) with a credit card, and pay your mortgage with them.
The best way to pay your mortgage with a credit card is to do it when you can take advantage of rewards card offers. For instance, many card companies will periodically offer a huge points bonus when you open a new card and spend a certain amount by a specified date. The points, in this case, will likely offset the costs of a cash advance or third-party service.
When plastic is not fantastic
You should worry if you regularly can’t pay your mortgage without resorting to a credit card. Maybe times are tough and you really have no option. But having to juggle debt in that way is a bad sign.
It may be time to regain control of your finances. This exercise is not a lot of fun. But it’s a whole lot better than the alternatives. Here’s a plan:
- Monitor every cent you spend over at least a month
- Analyse your findings and see where you have opportunities to save
- Work out a tough yet realistic household or personal budget that provides you with spare money to pay down your debt
- Set yourself some debt-reduction goals: having milestones helps you track progress and adjust your objectives to reality
- If you’ve got a couple of small balances, by all means, clear them first: quick wins are good for your morale
- Then pay down your highest interest debt first: probably store and credit cards
- Move on to lower interest balances as you clear the expensive ones
- You should soon find yourself in a virtuous circle: The less you owe, the smaller your monthly payments and the quicker you can clear your remaining debt
Have things gotten so bad you can’t deal with that plan? You need professional help. Get good debt advice from a reputable counselor. A good source for this is the National Foundation for Credit Counseling website.
Get your priorities straight
You need to recognize the difference between secured and unsecured debt. With unsecured debt, late payments could see your credit score harmed and your ability to continue borrowing compromised. But with secured debt, your home is at risk if you fail to keep up with payments. Oh, and you still see your credit score ruined and your continuing borrowing made difficult.
You see the difference? They’re the same, except with one you might end up sleeping in your car or on your friends’ sofas or in your parents’ spare bedroom.
Protect the roof over your head
You may think that prioritizing your mortgage over your plastic is common sense. During the worst years of the Great Recession, many more consumers prioritized unsecured debt than protected their homes.
Maybe you can see why. If your credit cards are necessary to keep feeding your kids, you’re going to keep them afloat. It’s usually a mistake to judge other people’s financial choices when you haven’t been in their situation yourself.
We’re no longer in the Great Recession. Overall, the economy’s doing fine. Yet, as recently as May 2017, TransUnion reported, “When faced with the choice of which debts to pay and which to miss, consumers in financial distress tend to prioritize unsecured personal loans ahead of other credit products such as auto loans, mortgages and credit cards.”
Time to get in shape, financially
Some economists are already saying we’re due for another recession soon. The current business cycle, which has seen a real growth in the economy, is today one of the longest on record and could end at any time.
Maybe now is the moment to cut down on luxuries, reduce your discretionary spending, pay down your unsecured debt and batten down the hatches. There could be storms ahead. And you might need that roof over your head.