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If you’re paying a mortgage every month, you may have wondered whether you could use a credit card to pay it in order to earn more points, miles or cashback rewards. It’s a tempting thought. If you’re paying $2,000 a month on your home mortgage, for example, and you have an unlimited points credit card that gives you 2 points per $1 spent on all purchases, you could accumulate 48,000 points a year.
Unfortunately, none of the top banks currently accept credit cards for mortgage payments.
“Paying your mortgage with a credit card often sounds like a great way to rack up rewards points until you do the math,” said Matt Schulz, chief industry analyst at CompareCards.
That being said, there are a couple of ways for homeowners to cash in on their hefty housing payment. Whether or not this is a good idea is the question.
“As with paying for college tuition or taxes with a credit card, there are often fees that come along with the transaction that cost more than the value of any rewards you would receive,” Schulz said.
What are your options? Read on to find out.
Option #1: Apply Wells Fargo cashback earnings to your Wells Fargo mortgage
Although no credit card allows you to pay for your mortgage payment directly, Wells Fargo gives mortgage borrowers a way to save money on their mortgage payment.
If you hold one of the following Wells Fargo cards — the Wells Fargo Cash Wise Visa® Card, Wells Fargo® Visa Signature® Credit Card, Wells Fargo Rewards Visa® Credit Card, Wells Fargo Platinum Visa® Card and Wells Fargo Propel American Express® Card — the cash back you earn can go toward your Wells Fargo mortgage.
The points you earn on your Wells Fargo cards can be redeemed in its Go Far™ Rewards website. One of the options is to set up and auto-redeem to pay down your Wells Fargo mortgage.
Option #2: Pay with Plastiq (but only if you can justify the fee)
Another option is using a third-party company that allows you to use your credit cards where they’re not accepted. Plastiq, an online bill payment service, allows you to put almost any expense on your credit card, including rent, mortgages, taxes and even business supplies, as a way to boost your points or miles. After opening an account, you enter your information, the payment amount and the card you’d like to use to pay for it.
Watch out for the fee: Plastiq then charges your card for the payment, along with a 2.5% fee. So if you make a mortgage payment of $2,000 on your credit card, it will cost you $50 for the privilege. If you do that every month for a year, it will cost you $600. This is on top of an annual fee, if your card charges one. In order to avoid paying interest on the card on top of the third-party service fee, you must pay off your mortgage amount every month without fail.
So if you’re using a 2% cashback card to pay your mortgage, you’re losing money — and not benefiting from the cashback reward — every time you do this. Plus you can’t use Visa or American Express cards on Plastiq to pay your mortgage, which limits your options.
“You don’t have to be an accountant to understand that it doesn’t make financial sense to spend 2.5% in order to get 2% back in return,” Schulz said. “Make sure you do the math first.”
One credit card that could work with Plastiq — even with the 2.5% fee — is the Citi ThankYou® Premier Card, which falls under the Mastercard brand. Earn 3X Points on Travel, Including Gas Stations, Earn 2X Points on Dining Out & Entertainment, Earn 1X Points on All Other Purchases. It also lets new cardmembers Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening.
First, spend what’s needed to get the Citi ThankYou® Premier Card’s sign-up bonus points. Pay your $2,000 monthly mortgage along with spending another $2,000 a month on travel (which includes gas on this card) and $1,000 a month on dining. Including the sign-up bonus, that comes to 180,000 points in a year.
Those points will earn 25% more value — worth $2,125 — when you use them in Citi’s ThankYou® Travel Center to book airfare, hotel rooms, car rentals, cruises, vacation packages and destination excursions. Even if you subtract Plastiq’s 2.5% fee, you’re still ahead.
But this scenario only works during the first year when you earn the sign-up bonus.
After the first year, if you spend $5,000 a month on the card — $2,000 for travel, $2,000 on your mortgage and $1,000 on dining — it comes to 120,000 points or $1,200 a year. If you use those points for travel and get 25% more value, it goes up to $1,500 a year. But even if you subtract the $600 a year it costs to use Plastiq to pay your mortgage and the card’s annual fee of $95, waived for first 12 months*, you’re still ahead. But you need to pay off the balance every month; otherwise, the interest charges could eat up any benefit.
Option #3: Earn credit card rewards in other ways
In the end, you’re probably better off paying your mortgage from your checking account. If you’re looking for other ways to earn points on your credit card without jumping through hoops, check out these simple ways to do it:
- Get cards that offer the most points in the categories most important to you, like travel or groceries.
- Sign up for bonus point alerts.
- Get more value for your points by redeeming them on special websites like Chase Ultimate Rewards®.
- Take advantage of quarterly categories for higher bonus points.
- Pay other monthly bills with the card.
- Open a checking or savings account at a bank to earn more bonus points, like the Bank of America® Preferred Rewards program.
- Add a user to your card to increase your earning potential.
- Pay for large purchases (but pay off the card quickly to avoid interest charges).
- Combine similar Issuer cards — like the Chase Freedom® and the Chase Sapphire Preferred® Card — to maximize points you can earn.
“Ultimately, the best way to maximize your credit card rewards is to find the card that best fits your lifestyle,” Schulz said. “For example, if most of your spending is on dining and gas, look for cards that focus on those areas. It’s all about getting rewarded for what you’re already spending. Focus on that and you’ll be on your way to winning the credit card rewards game.”