Can you use your credit card to pay your mortgage payment?

You can use your credit card to pay your mortgage payment. That is the short answer to this complicated question. In most cases you should not do this. Read the article for a complete understanding of when it is and is not okay to pay your home mortgage with a credit card.

In tough economic times more and more people turn to their credit cards for everyday items such as food, gas for their cars and even for paying bills. This is especially true when someone loses a job and either has to take a job that pays less, has to rely on unemployment or is reduced to living off of one income (such as their spouse) when there previously was two.

There are many bills that it can be okay to pay with a credit card; however one that you should usually avoid is paying your mortgage payment with a credit card. There are other avenues that you should take first before taking this drastic measure because using your card for this purpose can max it out quickly and you are paying more interest on a loan that you are already paying interest on.

Why You Shouldn’t Use Your Credit Card for Paying Your Mortgage

As mentioned above, your credit card carries a high interest rate, most likely much higher than the interest rate that you pay for your mortgage. If you are looking at carrying this balance on your credit card because of an inability to pay, you are going to pay a hefty rate for the length of time this money is on the card.

Another problem with charging your mortgage payment is that this is a warning sign to your credit card company that you may become an at risk credit card user. In many cases it does not matter if you have an exemplary payment history; the credit card company may do one of a few things regardless.

Firstly, they may do nothing, which simply means that you are going to have to find a way to pay the bill at the end of the month. Secondly, they may increase your interest rate as a preemptive strike to what they may view as a risky account. Thirdly, they may increase your monthly payment to ensure that they get the most that they can off of this debt (if they think you are going to default sooner or later, they are going to try to get paid sooner if possible). Lastly, they may reduce your credit limit, ensuring that you do not over extend yourself on your card, making it impossible for you to pay. These are things that you must be aware of before taking this drastic step.

In many cases you may have a restriction from your mortgage lender preventing you from paying your debt with a credit card. While this is not the common course of action from the banks (most want to get paid, they don’t care how), you will want to ensure that if it is absolutely necessary that this is even a viable option.

The Exception to the Rule

Like most things, there is an exception to this rule. There are those people who pay all of their bills via credit card each month and then pay off their credit cards at the end of the month. Why? Because they want to earn reward points or money or flyer miles, etc. This is more common among businesses than among individuals; however, if this is your common practice, then you charging your mortgage isn’t going to make your credit card company sit up and take notice.

If this something that you are considering doing, not for financial reasons but because you want to earn the rewards on your credit card, then you may want to consider going online and paying off the charge within the first week of the charge to prevent alarm from your credit card company. After a couple of months they will become accustomed to the charge and the risk of the credit card company taking action is minimal.

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Other Alternatives to Charging Your Mortgage to Your Credit Card

If you are in a tough financial situation and things are desperate, before you take the steps to charge your mortgage payment, you may want to consider other options. First of all, talk to your bank. Sure, many politicians have painted banks to be the big bad wolf unwilling to work with their borrowers. The truth, however, is that most banks will bend over backwards to work with you regarding your mortgage. They want to get paid and there are far too many banks in foreclosure for them to turn their backs on individuals who may need a month or two to catch up on their bills due to unforeseen circumstances.

If you have equity in your home, the bank may work with you on a second mortgage. In some cases you can borrow enough money to equip you for a year so that you can continue to pay your bills while you straighten out your finances. This is something that you should discuss not only with your bank, but with other mortgage companies as well.

If you have continued to pay all of your bills and you are suddenly finding yourself short, you may want to consider a personal loan. Many of the same places that you have your credit card with also lend money. If your accounts are in good standing, then it is possible that you might get a small loan to carry you over. This is not something that you should do if you don’t see an end in site to your financial trouble; you don’t want to add another bill that you can’t pay.

You should also go over your budget and see what you can eliminate from your monthly bills. If you have two cars consider giving one up and taking the bus. Better to lose a car than to lose your home. Many people don’t think they can do without things like Internet, Cable, cell phones and so on, however, those bills add up, often to several hundred dollars a month, and can make the difference between keeping and losing your home.

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