Credit Card Convenience on Sale

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Credit Card Convenience on Sale


Updated: December 26, 2012

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Credit Card Convenience on Sale
March
12

If you throw off the numerous costs and debt possibility associated with owning a credit card, the plastic really offers you convenience, convenience and once again - convenience. You begin to feel it once you have replaced the tickling and very often insufficient cash in your wallet with this one small thing that makes it possible to get things and services whenever you want.

More and more credit card offers today extend the convenience of their services even further. Take credit cards with concierge or cards with travel and other insurances. Their convenience is not only in your purchasing power but also in the protection of this power.

In this article we are going to discuss the reasonability and actual usefulness of another convenience offered by a credit card - the ability to charge mortgage to a plastic and earn rewards doing that.

There are quite a range of credit cards out there that are accepted by mortgage companies as a payment. Evidently, this option is of great convenience and benefit to the customer because most of such cards allow earning point rewards or air miles for using them.

It is often called a win-win deal when both the sides take their cut of the profit. On the one hand, cardholders get an additional stimulus to make a mortgage payment on time and so mortgage companies collect the due revenues. On the other hand, cardholders have an additional source of the so much hunted-for rewards.

But who really gains and who incurs losses out of this pay-mortgage-with-a-credit-card deal? There cannot be two winners at the same time.

Well, while mortgage companies do not lose anything processing credit cards, you do incur additional charges. The matter is that the whole business is done by the intermediary player, Cardit. The company accepts and processes credit card payments from homeowners and only then sends the full cash amount to the mortgage company.

The merchant fee that mortgage companies should be charged does not disappear, however. It is now incurred by the intermediary, which in turn shifts it to the homeowner.

The merchant fee comes in the form of "convenience fee". So, it appears that while you enjoy the convenience in managing your finances and an additional opportunity to earn rewards, you pay extra for that. Put together all the other fees and rates traditionally tied to a credit card, and discharging your mortgage obligations with a plastic can be a rather expensive convenience for you.

How does that happen? Why are you not charged "convenience fee" when you buy goods and services at, say, an airline and earn frequent flyer miles? The answer is simple. The cost of the miles is already included into the item's price.

So, now ask yourself a question: why do you want a credit card to pay for mortgage? For the sake of rewards? Well, it may be less costly if you just use your rewards plastic to buy at selected merchants. For the sake of greater convenience? Then you can safely go ahead and just pay that convenience fee.

The difference is just that most rewards are earned and most convenience is bought.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products’ Terms & Conditions on the issuing banks' websites.
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