If you’re a credit card rewards enthusiast, you might have briefly heard about paying for your mortgage or rent with a credit card to earn more points. But if you’ve done any significant amount of research into this, you might realize that it’s easier said than done.
Between large fees, card restrictions, and bonus structures, the amount of information can become overwhelming very quickly. So, in this guide, we’ll walk you through all the techniques and warnings you need to know to pay your mortgage or rent with a credit card.
First, we’ll talk about the factors to consider when paying a mortgage or rent with a credit card. Then, we’ll walk you through how to figure out if it makes sense for your specific situation. Lastly, we’ll show you how to actually pay your mortgage or rent with a credit card.
What To Consider When Paying a Mortgage or Rent With a Credit Card
So what do you need to consider when you’re figuring out whether or not you should pay your mortgage or rent with a credit card?
In this next section, we’ll show you the 3 biggest characteristics you need to think about.
Rewards vs. Fees
If you’re paying your mortgage or rent with a credit card, you’re probably looking to accumulate points. After all, if you just had your mortgage or rent deducted from your bank account every month, you’re looking at thousands of dollars you could be using to amass points.
That’s money left on the table, right? Absolutely! But there’s a caveat here.
If you’re paying for a mortgage or rent with a credit card, you’ll almost always be charged a fee as a percentage of the payment amount. For example, if you pay for rent online on your apartment complex’s portal, you might see an option to pay for rent using a credit card with an additional 3.5% fee.
That means that for every $1,000 you pay in rent, you’d have to pay $35 in fees. You need to think about whether or not the points you’ll earn from your spending would be more valuable than the extra fees you’d pay.
Mortgage Interest vs. Credit Card Interest
If you are thinking about paying for your mortgage using a credit card, you need to absolutely avoid paying interest on your balances. Mortgage interest rates are a tiny fraction of credit card interest rates.
For example, your credit card might have an interest rate of 20%, while your mortgage loan might only have an interest rate of 3% to 4%. If you make a mortgage payment on a credit card and end up carrying a balance on your credit card, that’s a surefire way to pay a boatload in credit card interest fees. This pretty much wipes out the value of any rewards you might accumulate.
This is the equivalent of “spending a dollar to save a dime.”
So if you’re thinking about paying for your mortgage with a credit card, you need to absolutely make sure you’ll be paying off the balance in full every month without accruing interest fees.
When you take out a mortgage loan, it’ll show up on your credit report, and as time goes on and you make monthly payments, you’ll see your credit score increase. When you make mortgage payments with a credit card, that amount will essentially be moved to a credit card.
If your credit card has a credit limit of $5,000 and you make a $1,500 mortgage payment, your credit utilization ratio will shoot up to 30% on that card, which can lower your credit score.
Just keep your credit utilization in mind — if you have large credit limits and can keep your utilization ratio low, then this probably won’t be an issue.
Hot Tip: Remember, most business credit cards (with the exception of Capital One) aren’t reported on your personal credit report, so you can keep your credit utilization ratio lower by making mortgage payments on a business credit card.
When Does It Make Sense To Pay Your Mortgage or Rent With a Credit Card?
Now that we’ve touched on the major considerations and trade-offs you’ll have to make when you’re paying a mortgage or rent with a credit card, let’s go through some scenarios in which it makes sense to do so.
One of the best ways you can skew the economics in your favor is if you’re pursuing a welcome bonus and need to meet a minimum spending requirement. For example, if you have a minimum spending requirement of $15,000 in 3 months but your monthly spending is only $4,000, then you can charge a mortgage or rent payment to meet that minimum spending requirement.
Because the value of welcome bonuses is often huge, paying a small fee on a mortgage or rent payment can make a lot of sense.
Speaking with broad brushstrokes, you should pay for a mortgage or rent with credit cards when the rewards you’d earn outweigh the cost of earning those rewards.
For example, The Blue Business® Plus Credit Card from American Express earns 2x Amex Membership Rewards points per dollar spent on the first $50,000 in purchases per calendar year.
Earning 2x points is equal to approximately 4.4% return on spend, based on our valuations. That means that as long as the fees you pay are less than 4.4% and you’re under that $50,000 per calendar year threshold, you should be putting your mortgage and rent payments on this card.
Other options include the Citi® Double Cash Card, Chase Freedom Unlimited® card, and the Capital One® Venture® Rewards card.
If, for example, you had a card that only earned 1% cash-back and the fee for paying a mortgage or rent is 3%, you’d effectively lose 2% on these payments. Not a good idea.
So, the best way to figure out if it makes sense is to take out your calculator and figure out the value of the rewards you’re earning and comparing it to the cost of the associated fees.
How To Pay Your Mortgage or Rent With a Credit Card
So, let’s say you’ve decided that paying your mortgage or rent with a credit card makes a lot of sense. Great!
What’s next? The next step is to figure out the best providers of these services to make these payments for you.
If you are a renter, you might already be making rent payments online by visiting an online portal or website. And on these websites, you might see an option to pay using a credit card. In that case, all you’d have to do is just select that option and make your payments.
Making a mortgage payment is a bit more challenging for a number of reasons. For example, making rent payments with credit cards is a more common practice, while making a mortgage payment with a credit card is rarer. Also, your mortgage loan might be sold off numerous times, so figuring out where to even make your payments can be cumbersome if you’re not using autopay.
In this next section, we’ll show you how to pay your mortgage or rent with a credit card, starting with the best solution available.
Plastiq: The Best Way To Pay Your Mortgage or Rent With a Credit Card
Plastiq is the major player in the space of making “non-traditional” payments possible using credit cards. Plastiq isn’t available for just mortgages and rent — you can also pay utility bills, insurance, and tuition with Plastiq.
If you are making residential rent payments, you can essentially use any payment method, including Visa, Mastercard, American Express, Discover, Diners Club International, and JCB.
You currently cannot use Plastiq to make mortgage payments with American Express and Visa cards. Discover and Mastercard are the main viable payment methods for mortgage payments.
To use Plastiq, all you have to do is create an account, provide the recipient information, the payment amount, and your credit card information. Plastiq will charge your credit card as a purchase instead of a cash advance, and your payment will be sent!
There’s a fee of 2.85% for standard ACH bank transfers, which is the cheapest option. You can also choose expedited ACH bank transfers, expedited U.S. checks, standard U.S. domestic wires, and international wires for additional fees.
Hot Tip: There are occasional promotions that can reduce fees, particularly on Mastercards from 2.85% to 1.5%, so be sure to look out for those.
And you can often get these fees reduced via limited-time promotions, which can make the economics a no-brainer! The easiest way this can be accomplished is by accumulating Fee-Free Dollars, also known as FFDs.
FFDs are dollars you can send on Plastiq without incurring fees. For example, if you have $500 in Fee-Free Dollars and you pay a bill in the amount of $500, then you won’t have to pay any fees!
One of the easiest ways to earn FFDs is to make referrals to family, friends, business associates, and more.
Bottom Line: We’re big fans of Plastiq. Making mortgage and rent payments on Plastiq is super easy, thanks to its seamless registration process, easy forms to fill out, and intuitive website. On the surface, 2.85% may seem like a lot, but FFDs and promotions can drop these fees dramatically, making it a no-brainer to put your mortgage and rent payments on a credit card using Plastiq.
Alternatives To Plastiq
Plastiq is not the only player in this space, but they’re the most reputable and have some of the most reliable technology out there. And that’s important, considering you’re sending money to others.
However, other options to pay rent include RadPad, PlacePay, RentTrack, RentMoola, and Venmo.
The only other major option to make mortgage payments is Melio, which is strictly for business purposes, not any personal transactions.
However, Plastiq almost always beats out these competitors in terms of pricing and flexibility.
Paying for your mortgage or rent with a credit card is a simple concept but a somewhat convoluted practice.
First, you need to figure out what the pros and cons are for paying with your mortgage or rent with a credit card. You should quantify the rewards you earn and compare them to the cost of earning those rewards. Then, you should think about whether or not you’ll be able to pay off all balances in full to avoid credit card interest. Lastly, you should consider the potential increase in credit utilization ratio and the decrease in your credit score (if applicable).
Once you’ve done that, you should seek out the best card for these purposes. Ideally, you’re always putting these transactions on a card with a welcome bonus you’re working on. If you earn a welcome bonus in the process, you’ll usually come out ahead.
Our favorite payment provider for mortgages and rent when using a using Discover or Mastercard is Plastiq. The standard ACH fee is 2.85%, though it is possible to reduce this through Fee-Free Dollars and promotions. It has competitors, but you’ll almost never see superior pricing and platform design compared to Plastiq, so this is going to be your best choice.
We hope you found this guide useful to help you put a mortgage or rent payment on a credit card!
The information regarding the Capital One® Venture® Rewards card was independently collected by Upgraded Points and not provided nor reviewed by the issuer.