How to pay home loan with credit card? Is it a smart idea?

Paying your home loan with a credit card might seem unconventional, but some Americans do it without a qualm. Keep in mind that with the right approach, it can be a strategic move. Of course, this method isn’t without its challenges, but for some, the benefits, like earning rewards, can outweigh the drawbacks. Let’s explore how to pay a home loan with a credit card and the intricacies of this payment method.​

Can you pay your mortgage with a credit card?

The truth is that most mortgage lenders don’t accept direct credit card payments from you. This is primarily due to the high transaction fees associated with credit card processing. However, some third-party services can facilitate this process by acting as intermediaries.

They accept your credit card payment and, for a fee, send a check or bank transfer to your mortgage lender. It’s important to note that not all credit cards are accepted by these services; for instance, Plastiq doesn’t accept American Express for mortgage payments. ​

Why should you consider using a credit card for mortgage payments?

Here are some good reasons why you may consider paying for your home mortgage through a credit card. 

You can earn valuable rewards on large payments

If you use a reliable rewards credit card, you could earn:

• Cashback (1–5%)
• Travel points/miles (2x–5x per dollar)
• Sign-up bonuses (worth $500+ in some cases)

Since mortgages are one of the biggest monthly expenses, putting them on a rewards card can supercharge your earnings.

You can improve your cash flow and flexibility

Paying with a credit card gives you an extra 20–30 days before the bill is due (depending on your card’s billing cycle). This can help:

• Smooth out cash flow during tight months.
• Avoid late fees if you’re waiting on a paycheck.
• Time payments strategically around bonus periods.

You may get credit card sign-up bonuses faster

Many premium cards offer lucrative sign-up bonuses. Paying your mortgage with a credit card helps hit spending requirements quickly, without unnecessary purchases.

There is a chance to shield yourself from fraud and disputes

Credit cards offer stronger fraud protection than bank transfers. If there’s an error or unauthorized charge, you can:

• Dispute the transaction (under the Fair Credit Billing Act).
• Freeze payments during disputes.
• Avoid direct bank account access (unlike ACH payments).

This is especially useful if you’re using a third-party bill pay service.

It may give your credit score a boost

If managed correctly, paying your mortgage with a credit card can help your credit score by:

• Adding on-time payments to your credit history.
• Increasing credit utilization responsibly (if you pay off balances in full).

Warning: If you max out your card, your credit score could drop due to high utilization.

It can be your emergency backup plan

If you’re in a temporary cash crunch, using a credit card can help you:

• Avoid mortgage late fees (which are often 5% of the payment).
• Prevent credit damage from missed payments.

Using a credit card is sometimes better than payday loans or high-interest personal loans.

What are the costs involved in paying your mortgage loan with a card?

Processing fees

Third-party services typically charge a fee for facilitating credit card payments to your mortgage lender. ​

Interest rates

If you don’t pay off your credit card balance in full each month, you’ll incur interest charges. Remember, credit card interest rates are generally higher than mortgage rates, which can negate any rewards earned. ​

Impact on credit scores

High credit utilization can negatively affect your credit score. Using a significant portion of your credit limit for mortgage payments can increase your credit utilization ratio, potentially lowering your score. ​

How to pay home loan with a credit card: The steps involved

• Check with your loan lender: Confirm whether your mortgage lender accepts credit card payments directly or through third-party services.​
• Choose a third-party service: If your lender doesn’t accept credit cards, select a reputable third-party service.​
• Select the right credit card: Use a rewards credit card that offers the best return on your spending. Ensure that the rewards earned outweigh the processing fees.​
• Monitor your credit utilization: Keep an eye on your credit utilization ratio to avoid negatively impacting your credit score.​
• Pay off your balance promptly: To avoid interest charges, pay off your credit card balance in full each month.​

What are the pros and cons of using a credit card to pay off a home loan?

Pros

• You can accumulate points, miles, or cash back on significant expenses.​
• It provides flexibility in managing monthly finances.​
• You can help prevent late fees if you’re short on cash.​
• On-time payments help your credit history.

Cons

• Third-party services charge processing fees that can offset rewards earned.​ These third-party fees are typically 2.5%–3% per transaction.
• Carrying a balance can lead to substantial interest charges.​
• Increased credit utilization can negatively affect your credit score. High credit utilization (using >30% of your limit) can lower your score.
• Mortgage interest is tax-deductible, but credit card interest is not. Remember, rewards are typically considered rebates, not taxable income.
• There are late payment penalties. If your payment is delayed, mortgage lenders may charge 5% of the payment.

What are some red flags to watch for when using a credit card?

While there are benefits, beware of:

• High fees (2.5–3% with third-party services).
• Interest charges (if you don’t pay the card in full).
• Some lenders block third-party payments.
• Cash advances (if there are no rewards + high APR).

What is the smartest way to pay your mortgage?

Using a credit card to pay your mortgage is usually a last resort. There are smarter alternatives to paying the mortgage with a credit card. These can help you manage your finances more sustainably without jeopardizing your credit scores, budget, or home equity. These options are worth exploring before swiping your card. Keep in mind that they are easier on your finances and more acceptable to lenders.

Refinance your home loan

What it is: 

Refinancing replaces your existing mortgage with a new one—often with a lower interest rate, better terms, or a different loan type (fixed vs. adjustable).

Why it’s smarter:

• Reduces your monthly payment by securing a lower rate.
• Frees up monthly cash flow without needing to use credit.
• Helps in consolidating debt if you roll in other liabilities.

Best for: 

Homeowners with solid credit scores and equity in their homes.

Tip: Always compare loan estimates from multiple lenders and factor in closing costs.

Use a HELOC (Home Equity Line of Credit)

What it is: 

A HELOC loan lets you borrow against the equity in your home. It is similar to a credit card but with a much lower interest rate.

Why it’s smarter:

• You only pay interest on what you draw.
• It is often used to pay off high-interest debt (including credit cards).
• Offers much lower rates than traditional credit cards or cash advances.

Best for: 

Homeowners with at least 15–20% equity and a good credit profile.

Caution: Your home is the collateral—missed payments could lead to foreclosure.

Cash-out refinance

What it is:

This allows you to refinance your mortgage for more than you owe and take the difference in cash, which you can use to cover debts or expenses.

Why it’s smarter:

• Unlocks your home equity in a lump sum.
• Usually offers lower interest than personal loans or credit cards.
• Can consolidate high-interest debt into a single, manageable payment.

Best for: 

Homeowners with significant equity who need cash for large expenses.

Personal loan

What it is: 

An unsecured loan is offered by banks or credit unions with fixed interest rates and set repayment terms.

Why it’s smarter:

• Typically, it has lower interest rates than credit cards, especially for good credit borrowers.
• Offers a structured repayment plan to avoid prolonged debt.
• Doesn’t put your home at risk (unsecured loan).

Best for:

Short-term cash flow issues or consolidating smaller debts.

Emergency savings or rainy-day fund

What it is:

Rainy day funds are set aside for unexpected expenses or cash flow gaps.

Why it’s smarter:

• There is no interest, additional fees, or impact on credit scores.
• Prevents you from relying on costly credit options such as credit cards or cash advances.
• Encourages financial discipline and preparedness.

Best for: 

All homeowners, if you have savings, use them before considering debt options.

Request a forbearance or payment deferral

What it is:

It temporarily pauses or reduces your mortgage payments during financial hardship (often with lender approval).

Why it’s smarter:

• Offers short-term breathing room without turning to high-interest debt.
• Doesn’t require taking out new credit or risking your equity.
• May be available through your lender’s hardship programs.

Best for:

Those who face a job loss, health issues, or other verified financial setbacks.

Important: Do understand the repayment terms—some require lump-sum repayment later.

Negotiate a modified payment plan with your lender

What it is:

Your mortgage lender may allow you to temporarily adjust your payment schedule or reduce monthly payments.

Why it’s smarter:

• Keeps you in good standing with your lender.
• Avoids high interest or fees from third-party services or credit cards.
• Doesn’t require additional borrowing.

Best for:

Temporary cash flow issues or life events impacting finances.

Use a balance transfer offer (with caution)

What it is:

Some credit cards offer 0% APR introductory periods on balance transfers, which could be used to consolidate other high-interest debts, not your mortgage directly, but to free up funds.

Why it’s smarter:

• Helps reduce interest costs on other debt, freeing up money for mortgage payments.
• Gives short-term relief if managed carefully.

Best for:

People with strong credit and a clear plan to repay before the promo ends.

Tip: Do watch out for high balance transfer fees and interest rates after the intro period.

Key takeaway 

While paying your mortgage with a credit card isn’t straightforward, it can be a viable option under certain circumstances. That said, we cannot stress this enough: it’s essential to weigh the benefits against the costs and potential risks. And, the credibility of your credit card issuer. If managed responsibly, this strategy can help you earn rewards and manage cash flow effectively.

Written by Ramona Sinha. April 27, 2025

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.