Generally speaking, you cannot pay your mortgage with a credit card. Typically, you cannot pay for debt with debt. Of course, where there is a will there is a way. Here are four tricks to pay your mortgage with a credit card.
Pay Your Mortgage With a Credit Card Cash Advance
One of the good things about cash is that it is nobody’s business where you got your cash from. (Excluding, of course, money laundering, theft, and selling illegal goods.) Most credit cards offer easy cash advances. Many credit cards provide for a transfer from your cash advance credit line to a linked bank account. Some credit cards issue checks that you can write against your cash advance limit.
Sometimes, but not always, you can get away with using a credit card check to pay a mortgage. However, banks and mortgage companies often electronically scan and validate checks before accepting them. It is likely that your mortgage company or bank will know you are using a credit card check to pay your monthly mortgage payment. Some may reject it for that reason. To be safe, write the check to yourself and put it in your checking account. Then, write the mortgage company check from there.
Of course, most credit cards allow you to take cash out at an ATM with a PIN number. Remember, however, that most ATMs only allow a certain amount to be withdrawn each day. That limit is usually just a few hundred dollars, so if you are looking to pay a $1,500 mortgage bill, you need to plan ahead. In either instance, with just a little preplanning, it is easy to pay a mortgage with a credit card.
Credit Card Cash Advances Things to Remember
Not all credit cards come with a cash advance feature. Almost no credit card allows you to use the entire credit line to take cash advances. Rather, most credit cards offer a specific amount as a cash advance limit. So, while the amount you withdraw as a cash advance does count against your total credit limit, the cash advance limit ensures that you can only use part of your credit line for cash withdrawals.
For example, a person with a $20,000 credit line may only be allowed a $3,000 or $5,000 cash advance limit. The cash advance limit does not add to your main credit line but is a part of it. In the above example, if the credit card holder has a balance of $18,000 on the credit card account, the card user may only take $2,000 as cash, even if they have a $5,000 cash advance limit.
Credit Card Cash Advances Can Be Expensive
Most credit cards charge a cash advance fee. For example, the Chase Sapphire Preferred cash advance fee is $10 or 5%, whichever is greater. That means paying your $1,500 mortgage with a cash advance will cost you $75. Most Capital One rewards cards charge a 3% or $3 fee. Check your cards and see which one offers the cheapest cash advance.
Just because those credit card checks look free doesn’t mean they are. Credit card checks usually have the same rules and cost the same amount as other cash advances.
Pay Your Mortgage Payment With a Balance Transfer
You can’t pay your mortgage with a balance transfer directly from your credit card in most cases. Again, the can’t pay debt with debt rule applies in most cases. That doesn’t mean you cannot pay a mortgage with a credit card balance transfer.
Money is fungible. That means that all money is worth the same and can be exchanged for other money without gaining or losing value. That’s a fancy way of saying you use a credit card advance to pay your mortgage by sending a cash advance to your bank account and then sending a payment to the mortgage from your bank account. This technique requires either time (for the check to be deposited and cleared), or an existing balance large enough to temporarily cover your mortgage.
Use Your Bills to Pay Your Mortgage
Again, using the money is fungible concept, you can pay your bills with your mortgage. While you typically cannot pay debt with debt, you can pay your utility bill with a credit card, and you can pay your cell phone bill with a credit card, and you can buy your groceries with a credit card. Instead of using that money in your account to pay for those things, use your card and then use your bank account to pay your mortgage with squeaky clean cash.
Using a credit card isn’t free either. While there is usually no up-front fee to use a credit card to make a purchase, there is usually a pretty high interest rate that you don’t want to pay for long. If possible, pay your credit card off during the grace period to avoid interest charges. If not, pay your card as soon as you can to minimize interest payments.
- Usually, you can’t pay debt with debt
- Create one step between a balance transfer and a mortgage payment
- Deposit cash advance first
- Use a balance transfer to pay your mortgage
- Pay your bills then pay your mortgage
With a little bit of financial creativity, these tricks to pay your mortgage with a credit card cash advance can come in handy to help manage your money and budget your spending.
By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. Please note that material is not updated regularly and some of information may not be current. Consult with your own financial professional when making decisions regarding your financial or investment options.