I use my credit cards for everything. Mostly, I just want to earn rewards points. But many consumers miss out on earning points off their biggest monthly expense: their mortgage.
Earning points off your home mortgage is tricky. Most lenders won’t let you make a direct monthly home loan payment with a credit card.
All is not lost, though.
Even though you can’t make your loan payments directly with your credit card, it’s still possible to earn credit card points for a mortgage. Here are two ways to earn rewards on your mortgage.
1. Earn credit card points for a new mortgage
Earlier this year, Chase Mortgage announced that it is partnering with Chase Sapphire to provide 100,000 reward points to customers who get a home mortgage. The deal is available for Sapphire Reserve and Sapphire Preferred cardholders, in addition to standard Sapphire cardholders.
But Chase isn’t the only lender that provides credit card points for a mortgage. Capital One offers similar perks in its Simply Smarter Home Loans.
You can get up to 100,000 bonus miles for your Capital One Venture or VentureOne credit card when you take advantage of this mortgage program. Not only do you get bonus miles for getting a new mortgage through Capital One, but you can also receive those miles for refinancing your current mortgage with Capital One.
Mortgage bonus programs are attractive because they target current cardholders as well as new cardholders. If you signed up for a credit card last year and received a nice big signing bonus, you could get another big bonus this year by getting a mortgage. No need to open a new credit card account.
Don’t buy a house just for the bonus points, though. Make sure you’re ready to buy a house before you jump into all that homeownership requires.
Don’t forget to do the math, either. Can you get a lower mortgage rate elsewhere? Paying a higher mortgage rate could cost you thousands of dollars in interest, offsetting any reward you earned with your credit card points.
Additionally, if a lender requires you to purchase discount mortgage points to secure a lower interest rate, it might not be worth it. If you have to pay $2,000 for a discount point but your credit card rewards are only worth $1,500, you’re losing money.
Remember, too, that not all these programs are permanent. Lenders can discontinue them at any time.
2. How to pay your mortgage with a credit card for points
We already established that many mortgage lenders won’t let you make payments with your credit card. So how can you earn points every month by paying your mortgage with a credit card?
Use a third-party service.
Companies like Plastiq and Tio allow you to sign up for bill pay services. You pay them with a credit card and they make your bill payments, using a bank transfer or physical check. A charge shows up on your credit card, earning you points.
A monthly mortgage payment of $1,200 can mean big credit card points for you over time. However, it’s important to be careful when you try this strategy. Many third-party bill pay services charge a fee when you pay with a credit card.
Plastiq, for example, charges up to 2.5 percent for each transaction — that’s a $30 fee for every $1,200 mortgage payment you make. Over the course of a year, you would pay $360 to use Plastiq to manage your mortgage payments. Run the numbers to see if the value of your rewards exceeds what you would pay in fees.
Say you use Plastiq to pay your monthly $1,200 mortgage payment. If you earn one point for each dollar spent, you’ll net 14,400 points by the end of the year. If you can use those points to earn cash back or purchase a flight worth more than $360 (the annual fees you pay to use Plastiq), paying your mortgage with a credit card could be worth it.
I recently used my American Express card to buy a one-way ticket valued at $388 using 12,500 points. In that case, I ended up ahead because my plane ticket had a higher value than the fees I paid. Plus, there were points left over to go toward something else.
Check your own program to see what kind of deal you get when you redeem points.
Use this reasoning to see if it’s worth it from a cash back standpoint. If you only earn 1 or 2 percent cash back, it might not be worth it to pay a 2.5 percent fee. Use a card that offers 3 or 5 percent cash back, though, and it might make sense to pay a third-party fee to boost your credit card reward earnings.
Of course, all of the above only holds true if you pay off the credit card every month. Any time you pay interest on your credit card balance, you end up negating the value of your rewards.
Get creative with your financial strategy
Mortgage lenders are getting creative by offering credit card perks to borrowers. You can be creative with your financial strategy as well. As long as you plan ahead and verify that the perks are worth it, you can find a way to earn credit card rewards on almost any transaction — including your home mortgage.