Chances are you’ve found yourself wondering why your credit card can’t be used to pay off your biggest expense — monthly mortgage payments. While it’s conventionally unheard of to pay off a mortgage with a credit card, some third-party services make this atypical payment method a genuine possibility.
But while this option might offer some practical advantages, like extra reward points and protection against emergencies, it also comes with certain drawbacks you’ll want to consider.
Can You Pay Your Mortgage With A Credit Card?
Mortgage lenders almost exclusively prefer pre-authorized debit for mortgage payments. That’s because, as a general rule of thumb, using debt (a credit card) to pay off debt (a mortgage) is a bad idea. From the point of view of a lender, that’s a huge risk, which is why almost no mortgage lender will accept credit card payments.
Today, however, third-party services offer individuals the ability to make mortgage payments via a credit card. There are a few downsides, however, including a hefty convenience fee that usually falls between 2.5 and 3%.
How To Pay Your Mortgage With A Credit Card?
Your mortgage payments can be handled with a credit card through third parties set up specifically to offer this service. Here’s a look at what’s out there today:
Plastiq.com
Plastiq.com is a payment service, founded in 2012 with offices in San Francisco and Vancouver. This service allows you to pay your mortgage with a credit card, even if your lender doesn’t accept card payments directly.
Plastiq offers a range of payment services, including the ability for businesses and individuals to make credit card payments to vendors who don’t typically accept those payments. It works by linking your credit card and giving Plastiq your mortgage lender’s details. Then, they send the payment on your behalf via cheque, wire transfer, or ACH.
| Processing Fee | Flat fee of 2.9% |
| Compatible Payment Options | Visa, Mastercard, American Express, Discover, and Diners Club.* |
PaySimply
PaySimply is a Canadian payment platform that enables users to pay bills, taxes, and potentially also mortgage payments using various methods, including credit cards. You can check their website to see if your mortgage lender is available for payments.
This service works by selecting your chosen vendor from the database and linking your credit card to your PaySimply account. Once you pay by card, your payment is sent by PaySimply on your behalf, with various transfer methods available depending on the vendor.
| Processing Fee | 2.5% fee on all credit card payments |
| Compatible Payment Options | Visa, Mastercard, PayPal, and e-Transfer.* |
How Much Will It Cost To Pay Your Mortgage With A Credit Card?
If you pay your mortgage with your credit card, there are two costs to consider:
- The fees of the service you use
- The credit card interest rate
For example, if you used Plastiq.com to pay your $2,000 mortgage with a 2.9% fee, your credit card would the amount of $2,058. That means you’ll be charged interest on your mortgage payment plus the extra $58 in fees.
If you were to use Plastiq or PaySimply to pay your mortgage, how much would it cost you? Assuming you make monthly payments of $500, how much interest would you pay?
| Plastiq | PaySimply | |
| Fee | 2.9% | 2.5% |
| Mortgage Payment | $2,000 | $2,000 |
| Fee cost | $58 | $50 |
| Credit Card Balance | $2058 | $2050 |
| Total Interest Cost* | $97.40 | $96.67 |
| Total Cost | $155.4 | $146.67 |
Can Your Credit Card Rewards Outweigh The Cost?
Let’s say your credit card offers a flat cashback rate of 3%. Then you can essentially have the service fee covered by your cash back rewards. If your rewards rate is higher (or there’s a welcome bonus), then using these services purely for building rewards could be feasible. However, this is assuming you don’t carry the balance from month to month. If you incur interest charges the costs can easily outweigh the rewards you earn.
Benefits Of Paying Your Mortgage With A Credit Card
Earn Points
Paying your mortgage with a credit card can help you accumulate rewards points, miles or cashback depending on the benefits of your card. It could also help you qualify for an opening offer that requires you to reach a specific payment minimum.
Hold On To Your Cash
Using this method to pay your mortgage could help you manage cash flow during a billing cycle, allowing you to keep cash on hand for longer.
Avoid Late Mortgage Payment
You could potentially use this method of payment as a way to avoid missing a mortgage payment. This could be especially useful in emergencies when cash is otherwise tight and offers an alternative to a cash advance or payday loan.
Build Credit
Using your credit card to pay your mortgage could also help you build credit, as long as you are consistent and timely when it comes to paying off the balance of your card.
Drawbacks Of Paying Your Mortgage With A Credit Card
Service Fees
The high fees associated with these third-party services are a downside and can add up to a significant number if used regularly.
High Interest
With large payments processed by your credit card, leaving a balance is going to result in the rapid accumulation of high interest, making this a risky method of payment.
Increasing Your Debt-to-Credit Ratio
Using a credit card for large payments like a mortgage can also lead to an increase in your credit utilization ratio, or debt-to-credit ratio, which is a key marker in the calculation of your credit scores.
Should You Pay Your Mortgage With A Credit Card?
Paying your mortgage with a credit card might be tempting, but it’s essential to weigh the pros and cons carefully before making a decision. Here are some scenarios where it might be worthwhile:
Emergencies
If you’re faced with an unexpected financial emergency and have no other means of covering your mortgage payment, then using a credit card in this way could be an effective short-term solution. This could help you avoid late fees, protect your credit score, and bring peace of mind.
You Can Pay Your Balance
If you can comfortably pay off the balance on your credit card, immediately or within the next billing period, then using your card in this way could be practical. This can help you manage cash flow without incurring additional debt, making it a good alternative to a cash advance, for example.
The Math Checks Out
If you’re thinking about paying your mortgage with a credit card to maximize your card’s benefits, make sure to run some calculations first. Using your card in this way could make sense if it leaves you with more money in your pocket, once you factor in third-party fees. It could be a particularly useful way to max out your card’s introductory points offer, for example.
Final Thoughts
Using a credit card to pay your mortgage is possible thanks to third-party services like Plastiq, but doing so isn’t necessarily going to be worthwhile.
It could be a great way to cover your mortgage payment in case of an emergency or to help you maximize an introductory credit card offer, but in any case, you’ll want to carefully weigh up the benefits to see if this workaround makes sense for you.
