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Paying Your Mortgage Payment With Your Credit Card

By Erik Folgate

I was reading a couple of articles about paying your mortgage or rent payment with a credit card. There are some companies that are allowing you to use a credit card such as the American Express Blue Cash card to make mortgage payments. There is an enrollment fee of about $400 bucks, so it will take you about a year to gain back the money through cash reward programs. The credit cards with cash rewards is one of the reasons that you’ll hear people say that you can beat the system by paying the mortgage with your credit card and then paying the card with the money you already have set aside for the payment within 30 days. It sounds like a good idea, but I tend to think like a pessimist rather than an optimist when it comes to personal finance and spending habits. I am a pessimist, because I am tempted,like every other red-blooded American, to buy stuff. I love electronics, going out to eat, and novelty household items. And like every other American, unexpected things happen to me that cost a lot of money that I wasn’t expecting to spend.

When I told myself a couple of years ago that I would stop using and abusing credit cards, it was the first time that I started exercising self-control with my money. I could probably pay my rent or mortgage by credit card and be disciplined enough to pay it off before the end of 30 days, but I wouldn’t want to put myself in that situation. Instead of having that money sit in my account staring at me and telling me to spend it, I would rather just pay the mortgage with cash and sacrifice that awesome wonderful 1 to 5% cash back. If you really think that doing all of these little credit card tricks will help you become wealthy, then go ahead and try it. But, I’m pretty sure that Bill Gates, Oprah Winfrey, Warren Buffet, and Steve Jobs did not become wealthy from finding ways to maximize their credit card rewards.

The equation is simple for becoming wealthy. Be frugal with your money, become completely debt-free, payment free, invest as much as possible, prepare for emergencies, and give to others to show your appreciation to what God has given you. I would never be comfortable to write an article about how I think you should pay your mortgage payment on a credit card, because I know that everyone has their vices. If your vice is spending and having the will power to be responsible with your money, then I would steer clear of this gimmick that will ultimately put more money into the pockets of credit card companies instead of yours.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://www.financeandfat.com FinanceAndFat

    I tend to agree. You can’t argue that people make money with the rewards programs, but that isn’t the key to great wealth either. It really depends on the individual. I feel more in control of my money now that I am using cash and I don’t need the credit card temptation right now.

  • http://baglady.dreamhosters.com thebaglady

    as far as I know the rewards on amex cards top out at 1% for these programs. So that means the mortgage payer needs to pay a $40000 mortgage a year to break even? Having more debt to get “rewards” is kind of silly.

  • http://debtprison.net barry b.

    Great post! People need to stop using credit period right now. Americans are overstretched big time on personal as well as National Debt obligations – and our government is increasing spending in all programs. The future of our economy doesn’t look good – stop using credit and start saving. Yes – do without!!

  • author

    I agree with you Finance. Ever since I went to a lifestyle of strictly cash, I have felt more at peace with my finances. Even if I had the cash to pay off my credit card bills every month, it would still make me feel more uneasy, because of the added temptation that it gives me to use the money for something else rather than paying the bill.

  • Cris Nale

    No one can argue against the just use cash point of view, but I think most people use these services as a cash management tool and aren’t simply trying to maximize the 30 day statement period. There are plenty of people who don’t get paid on a regular basis and need a tool to help with the valleys and peaks of sporadic income. Despite the vocal majority, most Americans use credit cards responsibly.

    For just miles, the AMEX program is pretty much a wash with the $400 fee. There is also another service Cardit that is 2.49% of your payment to use. I’ve further seen some credit cards like Ditech where the rewards are used to pay your mortgage. Probably not for everyone, but I feel it’s encouraging to see new payment options directed towards housing.

  • Jacquelyn Hart-McCoy

    I think this issue is a very indiviual one. I use my credit card for everything (except my mortgage which charges a fee to pay that way so it makes no sense for me.) I end up making about 30-50 bucks a month from the cc company in cash rewards. How can I pass up this “free” money? I can totally see how some people really shouldn’t use there cc because it causes temptation to over spend. But I can honestly say I have always been frugal and not much of a spender. I have always paid it off in full each month. With inflation out of control, every dollar I put back into my pocket helps. I love that I can use my card to help me a little me.

  • author

    Jacqui, you’re one of those exceptions. My point is that I would never advise someone to do this, because I wouldn’t want it in my conscience if they “told” me they were good about paying their card off every month, but really weren’t good at it. Sounds like you’re playing the system. I love it!

  • http://www.itismylastresort.blogspot.com Tyson

    This makes sense only if you have very good credit history and you are eligable for very good credit card deals with rewards and rebates. $400 – that’s a lot to get in rewards. And don’t forget about APR!

  • Jacquelyn Hart-McCoy

    Your right. :-)

  • Rpatterson

    This is an excellent article. The best way to come out of debt and get control of one’s finances is to first stop spending. The mortgage-charging scheme is just another ploy by finance companies to make more money off of those who are looking for something for nothing.

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