Should you pay your mortgage with a credit card?

The more you look into the idea, you’ll see that making a mortgage payment with your credit card rarely makes financial sense.

Is making a payment on your credit card worth the risk of possibly carrying that amount on your credit card balance?

In the end, it’s a game of numbers. You'll have to decide if the points you’re chasing outweigh the potential costs. That's if your mortgage lender is even willing to go along.

More: Compare the best cash-back credit cards

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6 things to consider before paying your mortgage with a credit card

Here are six reasons why paying your mortgage with a credit card is probably a nonstarter.

1. Your mortgage lender likely won't accept credit card payments

Most mortgage lenders won't allow borrowers to make their payments with a credit card.

Policies vary. But lenders generally prefer taking your cash over a transfer of debt.

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2. Your credit card may not allow it, either

Visa, Mastercard and American Express have no problem with cardholders making mortgage payments and collecting rewards points from the transactions.

However, Bank of America generally does not allow mortgages to be paid with the credit cards it issues.

3. Using a go-between is an option, but it'll cost you

You can get around any objections from your mortgage lender or credit card by using a third-party payment provider as a go-between.

These services accept your credit card payment, then cut a check to the mortgage lender. And, they charge a processing fee for the service — typically up to 3%. If your monthly mortgage payment is $1,000, the fee would be $30.

4. Your credit card might hit you with fees, too

Before using your credit card to pay either your lender or a third-party, you'll want to confirm with your card issuer that the payment will not go through as a cash advance.

Cash advances come with their own fees and a higher interest rate. Credit card purchases typically have an APR of 12% to 20%. The APR on cash advances can reach up to 25%.

5. Don't forget interest and other fees

If you're not able to pay off the mortgage charges put on your credit card each month, you'll be stuck paying interest, too. And if you load up your card with debt, you could have trouble getting rid of it — and damage your credit score.

If you're late with a card payment, you'll trigger additional fees and risk doing further harm to your credit score.

6. The math often just won't work

The best opportunity to use mortgage payments to leverage rewards is through a credit card's initial sign-up bonus. Many cards offer enticing bonus points if you spend a certain amount during the first few months.

The rewards might be worth the equivalent of up to 30% of what you spend. That could be more than enough to cover the various services fees and higher interest. But most rewards programs offer everyday returns of 2% or less.

If your returns from using the credit card are likely to be outweighed by the costs, put your credit card back in your wallet — and keep making your mortgage payments some other way.

More: Mortgage payoff calcluator

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About the Author

Doug Whiteman

Doug Whiteman

Former Editor-in-Chief

Doug Whiteman was formerly the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

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