If you're like most people, you've probably considered paying your mortgage with a credit card. But is this really a good idea? What other options do you have to make mortgage payments? Here's what you need to know.
The cons of paying your mortgage with a credit card
There are some risks associated with using a credit card to pay your mortgage.
First and foremost, your credit score could take a hit if you don't keep up with your payments. Many homeowners who have taken this route have ended up looking for a personal loan to pay off credit card balances as the interest rate is much higher on their card than their mortgage. This can make it harder to borrow money in the future and even lead to bankruptcy.
Additionally, if you lose your job or have some other unexpected expense come up, paying your mortgage with a credit card may be difficult or impossible. In that case, you may have to declare bankruptcy or resort to other measures (like selling assets) to cover the bill.
The pros of paying your mortgage with a credit card
However, there are a lot of benefits to using a credit card to pay your mortgage.
For one, you'll ensure that your payment is received promptly by the company, and you won't have to worry about checks. If you're on a tight deadline or won't get paid in time, paying with a credit card can be an excellent choice to avoid late fees or penalties.
Another reason paying your mortgage with a credit card is so popular is the immense value you can get by charging large amounts on your credit card. Many cards now offer valuable membership rewards points that can go towards free gift cards, cash back, and discounted or even free travel options.
Are there fees associated with paying my mortgage with a credit card?
Most banks and payment processors will charge an additional small fee, typically 3% to 5%, for mortgage payments paid electronically and with a credit card. In addition, you may also be charged an additional fee by your card issuer if you withdraw money as a cash advance to make your mortgage payment.
Is it worth paying my mortgage with a credit card?
That answer is subjective and depends on your financial situation and goals. If you can make monthly payments that are lower than what you would pay if you borrowed the money from a bank or other institution, then using a credit card may be worth it. However, if you have high-interest debt or are worried about your credit score taking a hit if you miss payments, it's probably not the best idea to use a credit card to pay your mortgage.
The bottom line
In most cases, paying your mortgage with a credit card is not a good idea. However, there are some exceptions to this rule. If you are considering using a credit card to pay your mortgage, be sure to weigh the pros and cons first.
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