Can you pay your mortgage with a CC?

[hopefulfirefly]

I want to pay my mortgage with a CC, to gain the free points through the CC company. I've found the "auto payments" section on Flagstar's website, but no where that it allows me to use a CC for automatic payments. Is there some law against this?

[jIM_Ohio]

Yes, probably is a law. Or two. or three.

Issue is this-
You can cancel a CC payment after it is applied.
A mortgage has "paper" behind it and is a MBS (mortgage backed security) which is traded and regulated by the SEC.

The same way mutual funds are regulated by the SEC. I know that mutual fund deposits must come from a bank which is willing to guarantee the money exists so the transaction is real.

If a CC was used, it would be possible for me to buy X shares of mutual fund on CC, then cash the mutual fund out, and skip the CC bill. I have the money and could go out of country with the money.

You might be able to pay utilities with the CC, but probably not the mortgage. If you find a way to use the CC for the mortgage payment, let me know because I have a cc whose usage is tied to reducing my mortgage, so each time I pay my mortgage payment 1% more would come off the mortgage each month and that would pay that sucker off quite quickly.

[disneysteve]

Interesting response, Jim.

What I was going to say was simply that if you pay your mortgage with your CC, your mortgage company would have to fork over 3% of that payment as a merchant fee. So on a $1,000 payment, they'd lose $30. That's $360/year. Why would they possibly allow that?

Now you could write a convenience check to make your payment. Of course, that wouldn't make any sense since you'd have to pay the transaction fee, check usage often starts accruing interest charges right away and check usage usually doesn't qualify for rewards, so there would really be no point.

[safari]

The same reason why you can't charge a car purchase entirely on a credit card. Dealers usually let you charge up to $5,000 on a credit card, but the rest must be paid by cash, check or financed with a loan. Steve already explained it in his post above. The bank will have to pay 3% merchant fee off the transaction to the credit card company, which is lost money to them.

[jIM_Ohio]

I know there is an issue with mutual fund deposits. I ran into an issue moving my Roth withdraws from one bank to another around 2 years ago. The new bank needed a signature guarantee- that the bank would provide funds in event of certain cases so securities fraud would not occur.

[kork13]

The same reason why you can't charge a car purchase entirely on a credit card. Dealers usually let you charge up to $5,000 on a credit card, but the rest must be paid by cash, check or financed with a loan. Steve already explained it in his post above. The bank will have to pay 3% merchant fee off the transaction to the credit card company, which is lost money to them.

haha that's actually exactly what my father did once.... bought a car for $10k, put it on 2 cards for $5k each. Gave him the time to cash out some tied up funds, and he paid it off at the end of the month....with a healthy reward from the CC company! Looking back, I really am surprised he managed to do it. But then, that was nearly 10 years ago, so maybe the situation of the day was different...

[noppenbd]

The same reason why you can't charge a car purchase entirely on a credit card. Dealers usually let you charge up to $5,000 on a credit card, but the rest must be paid by cash, check or financed with a loan. Steve already explained it in his post above. The bank will have to pay 3% merchant fee off the transaction to the credit card company, which is lost money to them.

Dealers may do this, but I'm pretty sure it violates the credit card agreements. They basically say, if you are going to accept credit cards at all, you cannot limit how they are used (max charge, minimum charge, etc). So you could probably push that if you wanted to.

[disneysteve]

Dealers may do this, but I'm pretty sure it violates the credit card agreements. They basically say, if you are going to accept credit cards at all, you cannot limit how they are used (max charge, minimum charge, etc). So you could probably push that if you wanted to.

The CC companies have a loophole. It is the same one that allows gas stations to charge more for paying by credit than with cash.

Merchants are not allowed to charge extra for paying by credit but they are allowed to give a discount for paying with cash. Of course, that amounts to the same thing. It is just a semantic way for them to avoid the issue. So if you negotiate a price for a car and then whip out your credit card, the dealer could say, "Oh, that price we just agreed on is the CASH price. If you want to use your credit card, the price is 3% higher." In reality, they just don't accept credit cards but if you really challenged it, they'd probably be forced to accept it but charge you more for the purchase.

[noppenbd]

I was speaking about them allowing you to only charge $5000 and make you pay cash or finance the rest. I don't think they can argue that it is a cash price if they are letting you charge $5000 on a credit card and no more.

[boosami]

There is no actual law against changing things with your credit card. There are some stock broker regulations for borrowing on margin, though. Prior to the credit crisis, more and more banks were allowing you to pay by CC. IndyMac Bank, for example, allowed clients to make mortgage payments using credit cards. That's didn't work out so well for them though...

I for one would be happy to pay for everything on my charge cards. If I paid mortgages through them, the points I'd be reaping in would be astronomical.

[disgruntable]

The banks create these great things called credit cards. They convince people they need to use them to buy stuff (and charge them 20% interest). The banks convince businesses they need to accept the credit cards (and charge them a percentage of the transaction). The problem is, the banks realize what a scam it is and won't let you use a credit card to pay them.

It's a shame really, I would love to pay my mortgage with a credit card

[Johansen8]

It can be done but it requires sitting down and figuring out the percentages, fees, and figuring out the potential payoff versus fees. Of course they don't make it easy otherwise everybody would be doing it.

Problem if you use a third party and such, cash advances or whatever the payoff on rewards is minimal to say the least. Lots of cash advances degrade your ability to move up on the tiers with your card where you get double rewards for a purchase.

Best thing to do is use that one card to pay ANY bill. Taxes, homeowners association, car, insurance, gas, electric and even a big gulp at 7-11. One payoff is that you will have all of your bills in one place and be able to see where you are spending money.