Some people would like to pay their mortgage with a credit card for convenience… More likely it is because they want to earn points, miles or cash back on their mortgage payments.
It is possible to pay your mortgage with a credit card by using a service called Plastiq.
This is how the Plastiq website describes itself:
Plastiq is a bill pay service for savvy consumers and businesses seeking an edge.
By allowing you to use a credit card for virtually any expense, even ones like rent or key supplies that normally require a check, we make it possible to earn credit card rewards, tap early-payment discounts, and use your cash flow in the way that makes most sense to you.
The problem with Plastiq is that it charges 2.5% for every charge that you use.
To get around this, you need to find a credit card that you can apply for that will pay you in rewards or cash back in the first year after you sign up.
NerdWallet.com has a list of credit cards that offer big first year signing bonuses in cash or cash back throughout the year. This list is a little dated but I’m sure you can find others. On this list are:
- Discover It Cash Back: 5% cash back on specific categories and 1% on everything else… (Discover matches the cash back at the end of the year as a bonus)
- Alliant Cashback Visa Signature Credit Card: 3% cash back in year one and 2.5% cash back afterward (no limit on rewards) and $59/annual fee starting in year 2.
All of these can make the math work in year one…
The Alliant Cashback card is the easy winner here because it offsets the 2.5% Plastiq fee on your mortgage payment for the first year. In year 2 you are breakeven.
However, the Discover It Cash Back card could also work if you spend a lot on other categories that you will get 10% back on after Discover doubles your cash back at the end of the year.
For instance, Discover has credit categories such as wholesale clubs, gas stations, restaurants, Amazon.com, etc… So if you spend more than $5,000 on these categories throughout the year, you will get $500 cash back from Discover at the end of the year.
If you have a $2,000 monthly mortgage ($24,000 per year in payments) you will pay $600.00 in fees to Plastiq. This means you need to offset these fees by spending $6,000 in Discover 5% cash back categories ($500/month) which will be matched at the end of the year for $600.00 in cash back.
If you have excellent credit, you can probably sign up for new cards every year and just rotate through these cards with Plastiq.