Paying a large, recurring bill with a credit card certainly sounds like a smart way to maximize the points, cash back or frequent flier miles you earn from your card. But if you try to pay your mortgage with your credit card to earn cash back rewards, you'll discover that your options are extremely limited and are unlikely to pay off. Mortgage servicers usually do not allow borrowers to make direct payments via credit card. You may be able to indirectly pay your mortgage if your credit card offers a bill pay service, but these services usually limit cardholders to a preselected list of potential payees, which are unlikely to include your mortgage servicer.
Bill pay services that do provide the option to pay your mortgage with your credit card may not give you any rewards for doing so. That being said, as long as there are no fees associated with paying this way and you pay your credit card bill in full and on time, you can take advantage of the float, the period between when you charge your mortgage payment and when your credit card bill is due. The float effectively lets you keep your mortgage payment in your bank account longer and earn an extra few weeks' worth of interest. In a low-interest-rate environment, the float won't help you earn any meaningful amount of interest. In a high-interest-rate environment, particularly if your mortgage payment is large, the interest you earn during the float could add up.

There are third-party services that help you pay your mortgage using your credit card, but the fees they charge will probably exceed the credit card rewards you would receive. For example, if the fee is 2% of your mortgage and your credit card pays 1% cash back, you'll lose money by paying this way. There is one viable option that lets you combine mortgage payments with credit card rewards. Some lenders offer a cash-back credit card that automatically applies your cash back to your mortgage principal. This automated savings feature ensures that you put your credit card rewards to good use instead of spending them at the mall. If you miss a credit card payment or carry a balance, however, the credit card won't actually help you. The interest and late fees you'll pay will far exceed your cash back rewards.

  1. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Is Apple Pay safe and free?

    Apple Pay is a mobile payment system created by Apple to reducing the number of times shoppers and buyers have to pay for ... Read Full Answer >>
  5. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  6. Can you use your Walmart credit card at Sam's Club?

    Consumers can use their Walmart credit cards to shop at Sam's Club. However, they cannot use their Walmart credit cards when ... Read Full Answer >>
Related Articles
  1. Savings

    How Parents Can Help Adult Children Buy a Home

    Owning a home isn't easy thanks to stringent lending standards. Thankfully, there's ways parents can help their kids buy a home.
  2. Credit & Loans

    HARP Loan Program: Help for Underwater Mortgages

    If you are underwater on your mortgage, this program may be just what you need to help build up equity in your home.
  3. Insurance

    6 Reasons To Avoid Private Mortgage Insurance

    This costly coverage protects your mortgage lender - not you.
  4. Credit & Loans

    Pre-Qualified Vs. Pre-Approved - What's The Difference?

    These terms may sound the same, but they mean very different things for homebuyers.
  5. Home & Auto

    9 Things You Need To Know About Homeowners' Associations

    Restrictive rules and high fees are just some of the things to watch out for before joining an HOA.
  6. Credit & Loans

    Adjustable Rate Mortgage: What Happens When Interest Rates Go Up

    Adjustable rate mortgages can save borrowers money, but they can't go into it blind. In order to benefit from an ARM, you have to understand how it works.
  7. Credit & Loans

    Walmart MoneyCard Vs. Walmart Credit Card

    Discover how the Walmart MoneyCard and the Walmart credit card have different benefits that may influence your decision on which one to choose.
  8. Savings

    These 10 Habits Will Help You Reach Financial Freedom

    Learn 10 key habits for achieving financial freedom, including smart budgeting, staying abreast of new tax deductions and the importance of proper maintenance.
  9. Credit & Loans

    Have Bad Credit? 6 Ways to a Personal Loan Anyway

    It'll cost you more, but borrowing is definitely doable. Here's how to proceed.
  10. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  1. Encumbrance

    A claim against a property by a party that is not the owner. ...
  2. Equity

    Equity is the value of an asset less the value of all liabilities ...
  3. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
  4. Chattel Mortgage Non-Filing Insurance

    An insurance policy covering losses that result from a policyholder ...
  5. Luhn Algorithm

    An algorithm used to validate a credit card number.
  6. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
Trading Center