Use Your Credit Card to Pay Off Your Mortgage... and Make Money While You're At It!

With credit card companies offering cash back or reward points on every dollar you spend, I’m sure you’ve often been tempted to spend more than what was strictly necessary. You might have also wondered if it made sense to pay for big ticket items, such as mortgages, with your credit card, just so that you could earn additional points!

Let’s put an end to your dilemma. Yes! It is possible to use credit cards for making big ticket payments such as mortgages. It is also possible to earn reward points during the process. However, while doing so, you want to be alert and tread carefully, else you may end up getting burned.

A basic rewards card allows you to earn points while spending money on your credit card. Every card has its own conversion ratio for each dollar spent. For example, every dollar that you spend on a Southwest Rapid Rewards Visa card will earn you 2 points. These points can be redeemed for flights, gift cards, hotels and other merchandise. In addition, most card companies periodically offer huge sign-up bonuses. In fact, many cards have offered clients upwards of 50,000 bonus points just for enrolling in their programs.

Usually, you have to earn these bonuses by spending a specific amount of money on the card within a specified period of time. For instance, you may need to spend $4,000 on the card within 90 days to qualify for the sign-up bonus. That is where paying for big ticket items, like your mortgage, comes in. By taking advantage of the sign-up bonus and by making mortgage payments using your credit card every month, you can earn enough points to make expensive things cheap, or even free!

Nevertheless, in order to get the most out of your rewards points, you need to make sure that you follow two simple rules.

1. You Must Always Pay Off Your Balance in Full

Every time you use a credit card to pay your mortgage, you must pay your credit card balance in full every month. The whole idea behind using a card to pay for your mortgage is to earn points that will make the things you want cheaper. If you rack up a balance and incur interest on it, you defeat the entire purpose of chasing points.

2. Don’t Use Your Card as an Excuse to Overspend

Use your card to pay for items that you’d normally buy. If you spend money on things that you don’t need just so that you can hit the spending limit, you’ll end up accumulating more debt than you can afford to pay off.

Ask your lender if there are any fees associated with using your credit card to pay your mortgage. Credit card transactions can be very expensive to process, so the lender may charge you a fee in order to avoid footing the bill.

If there’s a fee, weigh that against the rewards you hope to earn. Say you’re using a card that offers 2% cash back on all purchases — any processing fee exceeding 2% means you would be paying extra to pay your mortgage. In other words, you’d be losing money!

You should also ask how that transaction will be processed. Sometimes the card issuer processes such payments as cash advances on the card. Cash advances can start accruing interest as soon as the transaction clears, which means that they can get extremely expensive. Also, cash advances usually carry a higher interest rate than normal credit transactions, making the entire process quite unfavorable.

Fortunately, getting a loan for financing your business is much simpler than using a credit card to pay for your mortgage – all you need to do is call us Fund&Grow! We have helped organizations in all 50 states create 0% cash financing to invest in their businesses, and we can do the same for you! Contact our team to learn more about this today!