CardIt Review: Too Much for Paying Mortgage with Credit Cards
I am a credit card person. If possible, I will use credit cards to pay everything so I earn rewards for the money that I have to spend anyway.
Half a year ago, American Express announced that it will let members make mortgage payments with AMEX cards. The news generated quite some buzz as it marked the first time that a major card issuer allows cardholders to pay mortgage and earn rewards at the same time. Though the first mortgage provider (American Home Mortgage) signed up with AMEX to provide the service has gone out of business in the summer, the idea was an exciting one as mortgage is probably the single largest payment every homeowner has to make every month. It would be great if we can get some back. Too bad my lender, Countrywide, is not part of the deal (Countrywide does offer its own credit card, issued by FirstUSA, and the rewards can be used to pay off mortgage).
Last week when browsing the latest issue of Kiplinger’s Personal Finance, I noticed a small piece in the magazine that mentions a website called CardIt.com which also allows Visa, MasterCard, and Discover card members to pay their mortgages with the plastics. Of course, like any other convenient services (such as paying taxes with credit cards), there are fees involved. Since the only reason I want to use credit cards to pay mortgage is to get cashbacks, it only makes sense if the benefit (the rewards earned and savings on interests) outweighs the cost (the fees). That, however, is not the case. On CardIt’s website, it lists the cost of using the service:
What’s the catch? Are there fees?
No catch – you make a one-time secure payment and all of your personal information is protected. There is a fee per transaction associated with our service. The fee is 2.49% of the payment amount plus a fixed $19.99 charge per transaction. In other words, a $1,000 payment with Cardit will produce exactly $44.90 in fees. The interest rate of the credit card remains unaffected as do the reward plans. Your credit card company views it the same as any other transaction.
So basically, I have to pay 4.49% fees to get the maximum of 3% cashback (Chase Freedom card can give me 3% back) if my monthly mortgage payment is $1,000. And for most credit cards, the rewards are probably at 1% instead of 3%. Even at 3%, my monthly mortgage payment has to be at least $3,919 to just break even.
Sorry, I only have a small house and a small mortgage.
For whatever its worth, this service is not for me. Probably not for anybody else either.
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