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The other day I was talking about credit card rewards with a friend - as I tend to do, since I write about them day in and day out - and as we marveled over how many free flights he's been able to get by using his American Express card for all his small business expenses, he said, "if only I could pay my mortgage with my credit card - can you imagine? I'd get so many miles!"
He was laughing, but I was thinking, "why not?" Why can't you pay your mortgage with a credit card? Or maybe , just maybe . . . you can. I decided to investigate. After all, there are entire sites dedicated to "travel hacking" - the practice of searching for the best deals and steals to increase your mileage rewards to get as many free or cheap flights as possible. There must be something out there about using your mortgage payment to fatten up your rewards balance.
A quick Google search of "pay mortgage with credit card" pops up multiple results. The top results range from "Can I Pay My Mortgage With a Credit Card?" to "How To Pay Your Mortgage with a Credit Card" to "Should I Pay My Mortgage With A Credit Card?" Most of the results are more or less similar, so I didn't bother clicking on too many of them.
I read the articles and checked out their claims for myself. Here's what I found:
Most lenders won't allow you to pay your mortgage with your credit card
No matter what credit card you use, they just won't let you do it. The reason is simple: most mortgage companies do not accept credit card payments due to high processing fees associated with them. A credit card transaction fee can be as high as 3.5% for lenders.
What is more, your card issuer and card payment network also have to give the green light for a mortgage payment to go through successfully. Each party has its own rules. For example, Visa allows mortgage lenders to accept Visa debit and prepaid card payments; Mastercard allows the use of debit and credit cards for mortgage payments.
As for issuers, some credit card issuers do not allow mortgage payments. For instance, Bank of America and U.S. Bank credit cards cannot be used to pay mortgage. A bit better situation is with Wells Fargo cards, these cards can be used to pay a mortgage as long as the mortgage lender accepts them.
Ways to pay your mortgage with a credit card
Sometimes it is possible to make mortgage payments using third-party payment platforms, like Plastiq. However, such services also may have restrictions that could complicate your payment. For example, to pay via Plastiq, your credit card should be either Discover or Mastercard credit card. Plastiq cannot process mortgage payments from American Express, Capital One, and Visa credit cards. Plus, the service charges a 2.9% processing fee every time you use your credit card to make a mortgage payment.
However, there are pluses of using a third-party service for mortgage payments. If you use an eligible rewards credit card, you'll earn rewards as you would with any other purchase. Still, if you plan to use a third-party service, it's best to check with your card issuer, card network, and mortgage lender to make sure your payment will be processed.
Another way to pay with a credit card is to use a cash advance option. However, I would recommend it for emergency use only as cash advance involve fees, high interest rates and no grace period. You won't even be able to earn rewards as cash withdrawals and cash like transactions never earn rewards.
So it seems that paying your mortgage with a credit card and reaping rewards from it is, alas, not a viable option. Really, it's for the best. Mortgages have a built-in system to guarantee timely repayment, while credit cards do not. If you put your mortgage payments on a credit card and then get behind on them for some reason, you could find yourself in a world of hurt - one that no amount of frequent flyer miles, points, or cash back could redeem you from.
