Can You Use a Credit Card to Pay Your Mortgage?
Learn if paying your mortgage with a credit card is an option and the vital financial factors to weigh before making such a decision.
A mortgage represents a significant financial commitment, serving as a loan agreement between a borrower and a lender to finance the purchase or maintenance of real estate. The property itself acts as collateral, securing the loan, and the borrower agrees to repay the funds over an extended period, typically through a series of regular payments that include both principal and interest. This long-term obligation is central to homeownership for many individuals.
Many homeowners consider using a credit card to pay their mortgage, often seeking convenience or to leverage rewards programs. While directly charging a mortgage payment to a credit card is not an option, indirect methods exist that allow for such transactions. These workarounds involve additional steps and often come with associated costs, making the process more complex. This article explores how credit cards can be used for mortgage payments, the expenses, and financial implications.
Methods for Paying Your Mortgage with a Credit Card
Directly paying a mortgage servicer with a credit card is not possible. Mortgage companies do not accept credit card payments due to processing fees. These fees, often ranging from 1.5% to 3.5% of the transaction amount, would reduce the principal received by the servicer and are not absorbed by them.
To bypass this limitation, third-party payment platforms act as intermediaries. Services like Plastiq allow individuals to use their credit card to pay bills that require bank transfers or checks, including mortgages. The process involves charging your credit card through their platform, and then the service sends a check or electronic payment to your mortgage lender on your behalf. Plastiq accepts card networks like Mastercard and Discover for mortgage payments, though Visa and American Express are excluded for this transaction type.
Another indirect approach involves using credit card features like cash advances or balance transfers. A cash advance allows you to withdraw cash from your credit card’s line of credit, which can then be deposited into your bank account and used to pay the mortgage. Similarly, some credit cards offer balance transfer checks that can be written to yourself or deposited into your checking account to cover the mortgage payment. These methods essentially convert a portion of your credit limit into liquid funds for your mortgage.
Understanding the Costs Involved
Using a third-party service to pay your mortgage with a credit card incurs processing fees. Plastiq charges a fee of 2.9% of the payment amount for credit card transactions. For a $2,000 mortgage payment, this would translate to a $58 fee each time, increasing the cost of your housing expense.
Opting for a cash advance to fund your mortgage payment comes with charges. Credit card companies impose a cash advance fee, which is often between 3% to 5% of the advanced amount, or a minimum fee, such as $10, whichever is greater. A $2,000 cash advance could cost $60 to $100 in fees.
Beyond upfront fees, interest charges are a significant cost if the credit card balance is not paid in full immediately. Unlike regular purchases, cash advances begin accruing interest from the transaction date, without a grace period. The Annual Percentage Rate (APR) for cash advances and credit card balances is significantly higher than mortgage interest rates, with average credit card APRs ranging from 21.95% to 25.34% as of mid-2025. Carrying a $2,000 balance at a 25% APR would accrue around $41 in interest in just one month if no payments are made. If you miss a payment, credit card companies may assess late fees and apply a penalty APR, further increasing the cost of borrowing.
Broader Financial Considerations
Utilizing a credit card for mortgage payments impacts your credit utilization ratio. This ratio, which compares your outstanding credit card balances to your total available credit, is a major factor in calculating your credit score. Financial experts advise keeping credit utilization below 30% of your available credit, and ideally even lower, closer to 10%, for optimal credit health. Charging a large mortgage payment to a credit card can instantly elevate this ratio, potentially lowering your credit score.
The primary risk associated with using a credit card for a mortgage is the accumulation of high-interest debt. Mortgages carry lower interest rates, often in single digits, making them a more affordable form of borrowing compared to credit cards. Transferring a low-interest mortgage debt to a high-interest credit card can create a difficult financial situation, leading to escalating debt if the credit card balance is not paid off promptly. This can trap individuals in a cycle of debt where interest payments consume a larger portion of their income.
Considering this payment method also involves an opportunity cost. Funds used for credit card processing fees or interest could instead be allocated to savings, investments, or other financial goals. For example, the money spent on fees for using a third-party service could have been put towards an emergency fund or directly applied to the mortgage principal, accelerating payoff.
While credit card rewards programs may seem appealing for such a large transaction, the fees involved outweigh the value of earned rewards. Unless a card offers a high rewards rate or is used to meet a sign-up bonus spending requirement, the processing fees will negate any cash back or points earned. It is therefore essential to calculate whether the rewards genuinely exceed the costs before proceeding, as many scenarios result in a net financial loss.