Paying a Mortgage with a Credit Card: What You Should Know


You probably have different options for paying your mortgage loan. This includes writing and mailing a check, making a one-time online payment, or setting up recurring payments so funds are automatically drafted from a savings or checking account. Depending on where you bank, you may also have the option of paying your mortgage with a credit card.

This is a convenient feature. But before you enter your 16-digit credit card number, there are a few things you should know about paying your mortgage with a credit card.

Pay With a Credit Card and Avoid Late Fees

Some people could argue that paying a mortgage with a credit card is absurd and should be avoided at all cost. But the situation isn’t black or white. The truth is, there are times when paying your mortgage with a credit card makes sense. The key, however, is knowing the correct way to approach the situation.

Several reasons could justify paying a mortgage with a credit card. Let’s say you’re a self-employed worker or an employee who only gets paid once a month. In a perfect scenario, you’d receive your paycheck before bills are due. But things don’t always happen according to plan. Rather, your paycheck or direct deposit might be scheduled for a couple of days after your mortgage due date.

You have a choice: either pay your mortgage late or use a credit card to tide you over until funds arrive. Ideally, we should have an emergency savings account for these types of situations. But if you don’t have access to funds, using a credit card is the lesser of two evils.

Paying a mortgage late results in late fees, which could be as much as $30-$50 depending on your mortgage lender. And if your mortgage payment is more than 30 days past due, your lender will report the lateness to the credit bureaus and your credit score could drop as much as 100 points.

Using a credit card to pay your mortgage can prevent late fees and a damaged credit score. To be abundantly clear, you should only use a credit card if you’re able to pay off the charge as soon as your paycheck arrives. You shouldn’t carry a mortgage payment on your credit card for longer than a few days. This can increase your debt load, and you could end up paying double interest—interest to your mortgage lender, as well as interest to your credit card company.

Earn Reward Points for Each Mortgage Payment

Paying a mortgage with a credit card is also worth consideration if you have a credit card that lets you earn reward points redeemable for hotels, airfare, merchandise and statement credit, or if you have a cash back credit card. Since your mortgage is likely your biggest monthly expense, you can earn reward points faster. The more reward points you earn, the more you can save in other areas.

But again, this approach is only cost-effective when you pay off the credit card within a couple days of using it for your mortgage payment.

It’s important to note that not every mortgage lender allows credit card payments, and some that do charge a fee for this service. Talk to your lender and inquire about service fees.