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Most credit cards have rewards programs or sign-up bonuses these days, and many of those rewards increase with your level of spending. Doesn’t it make sense to funnel your large regular expenses, such as mortgage payments, through your credit card to reap those rewards?
Paying your mortgage with a credit card may be a reasonable option for you, but it requires planning and care — as well as a willing mortgage company and credit card issuer.
First, verify with your mortgage lender that they will accept payments by credit card and understand how to execute those payments. Typically, a lender that allows credit card payments will accept those payments online. Check the lender’s website for an online payment section, and put in the information necessary to set up payment via credit card. Verify with your lender when the payment will take effect to avoid any potential gap in your mortgage payments.
Next, search for a credit card that will allow you to make mortgage payments without incurring excessive fees in the process. Regular large payments of this type are often frowned upon by credit card issuers, and not just because of the amount of rewards — illegal activities are processed in the same fashion. To discourage the practice, credit card companies may apply a “convenience fee” to such transactions and make the fee high enough that the benefits of paying your mortgage via credit is wiped out.
You may have better success if the lender and the credit card issuer are part of the same financial group. The best option, if available in your area, is a mortgage lender that can also issue a corresponding cash-back rewards card that will automatically apply your cash rewards to the mortgage principal.
If you can’t find a suitable credit card company or lender, third-party services are available that can pay your mortgage via your credit card, but that also comes at a price and with risks. Unless you have an outstanding rewards program, the third-party fees are likely to be greater than the rewards you receive. Further, by adding another step in your payment process, you increase the possibility of a transaction going awry, and also increase the chance that you do not notice the missed payment until it is too late.
Even if your credit card company is willing to accept mortgage payments, you must be very careful and diligent with your planning. You may have enough money to make the mortgage payment, but if you let other spending rise beyond what you can pay off each month, you can wipe out your rewards with the collective interest charges from carrying a balance. Consider your credit limit as well — if you are running close to your credit limit on a regular basis, you can damage your credit score with high credit utilization (using most of your total available credit). You can see your credit report and credit score within minutes for free with Credit Manager by MoneyTips.
Remember that if you end up switching cards or canceling the credit card account that you will need to notify the lender of the change in payment method. Add the mortgage lender to the list of auto-payment creditors that you need to notify in the case of a change (and if you do not have such a list, make one immediately).
Options for paying your mortgage via credit card are dwindling, but if you are fortunate enough to find a mortgage lender that will accept credit cards and a credit card issuer that allows rewards for mortgage payments, why not take advantage of your good fortune?
If you want more credit, check out MoneyTips’ list of credit card offers.