Can I put my mortgage on a credit card to earn points?

Gaming the System: Earning Credit Card Points on Your Mortgage (The Indirect Way)

The dream of racking up serious credit card points simply by paying your mortgage? For most, it feels tantalizingly out of reach. Directly using your credit card to pay your mortgage lender is almost always a no-go. They typically don’t accept credit card payments due to the hefty transaction fees they would incur. However, don’t despair! The points-savvy among us have discovered a clever workaround: leveraging third-party payment services.

The core idea is simple: you can’t pay your mortgage directly with your credit card, but you can use a third-party service that allows you to pay them with your credit card. These services essentially act as intermediaries. They receive your credit card payment and then forward the funds to your mortgage lender (or landlord for rent payments) through a check or ACH transfer.

Think of it like this: you’re paying a service fee to use your credit card indirectly for a large payment, rather than paying the mortgage company directly.

How Does It Work?

1. Find a Reputable Service: Several companies facilitate these transactions. Research options like Plastiq (previously mentioned but there are others and it is always good to research current options). Compare fees, payment methods, and lender compatibility. Reviews are your best friend here – look for consistent positive feedback and address any potential red flags.

2. Link Your Accounts: You’ll need to link your credit card and your mortgage lender (or bank account). The service verifies your accounts and sets up the connection for future payments.

3. Initiate the Payment: Specify the payment amount and the date you want the payment to be sent to your lender. The service then charges your credit card and initiates the transfer.

4. Earn Those Rewards: As your credit card is being charged, you accumulate points, miles, or cashback rewards, depending on your card’s program.

The Upsides are Tempting, But Be Aware of the Downsides:

The biggest draw is, of course, the points. Imagine earning a substantial number of points each month simply by handling your existing mortgage payment! These points can be redeemed for travel, merchandise, statement credits, and more. It’s a smart way to maximize your rewards, especially if you have a high-spending credit card with a lucrative rewards program.

However, this strategy isn’t without its considerations:

• Fees are the Key: These third-party services charge fees, typically a percentage of the payment amount. This is the crucial factor. You need to calculate whether the rewards you earn outweigh the fees you pay. A lower interest rate rewards card with a high cashback value might be the best choice here. Consider if there are any welcome bonuses to help offset initial fees.
• Credit Card Limits: Make sure you have enough available credit to cover your mortgage payment plus the service fee. Exceeding your credit limit can negatively impact your credit score.
• Responsible Spending: This strategy is only beneficial if you pay off your credit card balance in full each month. Carrying a balance and incurring interest charges will quickly negate any rewards you earn.
• Impact on Credit Utilization: A large monthly payment can significantly impact your credit utilization ratio (the amount of credit you’re using compared to your total available credit). Keeping this ratio low is essential for a healthy credit score.
• Mortgage Lender Acceptance: Verify that your mortgage lender accepts payments from these third-party services. While uncommon, some lenders might have restrictions.

Is It Right for You?

Ultimately, the decision of whether or not to use a third-party payment service to earn credit card rewards on your mortgage is a personal one. It requires careful calculation and a responsible approach to credit card management. Ask yourself these questions:

• What are the service fees?
• What are the rewards I expect to earn?
• Can I afford to pay off my credit card balance in full each month?
• Do I have enough available credit?

If the math works in your favor and you’re committed to responsible credit card usage, this indirect approach can be a smart way to unlock valuable rewards on your mortgage payment. Just remember to do your homework, understand the risks, and always prioritize responsible financial management.