Will You Use Credit Card to Pay Mortgage?

A couple of days ago, American Express announced a program that will allow qualified cardmembers to pay mortgages with their AMEX credit cards. From comments left at my post, I can see opinions on this issue is as polarized as using credit cards itself: there are people like me who use credit cards all the time will like this idea to rack up rewards; there are people in the other camp think this will only make things worse as it looks like one can now *buy* a house on credit cards. For example, Moneymonk says

America has lost its mind. Why would you risk paying something you finance on credit ( a house) to finance it on another credit ( a credit card ) ? plus with the $395.00 fee. It is not worth the rewards. The cc company wins all the time.

and Debt Blitzkrieg agrees

I’m with moneymonk on this — it sounds like a dangerous plan. One tight month and the next thing you know you’re paying interest on your mortgage to your credit card company. Besides, I have to wonder how they must be jacking up regular rates to float all these rebate-type credit cards.

But NotAPoorRevolver thinks the program itself has nothing to be blamed for:

Moneymonk you must be crazy. Some people don’t carry a balance on their cards. In fact, the majority of AmEx customers don’t. Some people can afford to pay off all of the things that the charge every month, and for those who don’t…they should cut back their lifestyle….that simple.

Whether it’s a good idea or not, AMEX won’t make it available to just anyone with any credit score. As a CNNMoney article says

But American Express is limiting its venture to cardholders it pre-authorizes before enrolling them, and then checks on them every month thereafter before a mortgage payment is charged.

So it could prevent people already have trouble with their credit card payments from getting deeper in to debit. In the end, I think it all comes down personal responsibility. If you take care of your credit card bills every month with full payment, there shouldn’t be any problem because charging mortgage payments with plastics doesn’t add any extra burden to you. The only down side I can see is that if you are late, then you will punished twice, from both your mortgage company and AMEX. But even with that, you can still set up your account to pay the bill in full every month automatically.

To get an idea of how people perceive this new offering, I just created a new poll, Paying Mortgage with Credit Cards?, with four options:

  1. you think it’s a good idea and will use it to pay for your mortgage;
  2. you think it’s a good idea but won’t use it because of concerns regarding consequences of one late payment;
  3. you consider it a bad idea in general, but will use it as it doesn’t concern you in particular;
  4. you consider it a bad idea in general, therefore will definitely won’t use it at all.

Vote here or from the sidebar to express your opinion on this issue.

[poll=4]

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11 Responses to “Will You Use Credit Card to Pay Mortgage?”

  1. Super Saver |  May 25, 2007 at 6:57 pm

    Hmm… using credit to pay debt. I definitely wouldn’t do it.

  2. James G. |  May 25, 2007 at 7:18 pm

    I’d do it. If you get 1% cashback or other rebates on your CC then this is a quick and easy way to get more benefits in your pocket, granted you have the self-control to not overdo your spending and pay in full each month.

    To me, I’d rather put my mortgage, cell phone, and other bills all on CC and pay ONE time per month instead of several smaller payments to deal with. I’m really seeing no downsides to this if you use your cards correctly (i.e. PIF each month so interest doesn’t affect you). The criticism of having a late payment or not being able to pay your mortgage bill in a “tight month” is going to affect you whether or not you charge it to a CC or not.

    Now if you do carry a balance, and can’t control your spending enough to ensure you have enough to pay your CC bill every month, then this would be BAD for you. But generally, I think things like this should be made available to those who can benefit. If anyone gets in trouble by using this, it’s their fault and not the CCs.

  3. db |  May 25, 2007 at 7:28 pm

    Well, I still think it’s a rotten idea, and I agree it’s not the CC’s fault if you get in trouble, it’s your own.

    I can see there are some merits to the idea of getting cashback and doing the whole “pay in full by the end of the month” thing. Unfortunately, I don’t trust human nature to stick to the rational way of doing it. I fully expect some people will end up starting to float their mortgage.

    Besides, I still have to wonder where the money is coming from that enables these cash dividends. Hmm, my suspicious mind thinks it comes from higher fees. Higher fees that eventually get trickled back down to the consumer as higher costs.

  4. Bobby |  May 26, 2007 at 12:15 am

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  5. Jennifer |  May 28, 2007 at 4:56 am

    One tight month and the next thing you know you’re paying interest on your mortgage to your credit card company. Besides, I have to wonder how they must be jacking up regular rates to float all these rebate-type credit cards.

  6. Sun |  May 28, 2007 at 11:42 am

    James: I am with you on paying mortgage with credit cards and if it’s available to me, I will use it without any hesitation. I have been using credit cards for nearly ten years and didn’t have a single late payment. As you said, if using credit card correctly, credit cards can work for you instead of hurting you. If possible, I will charge everything with credit cards. If you have to spend the money, why not get some back (rewards)?

    db: I agree with you that not everyone is disciplined enough to pay each and every credit card bill on time. There are people late for their payments once in a while for whatever reasons, but do you trust yourself to make on time payment every time? If you do, then this program is not going to hurt you in any way. Besides, this program is not for everyone. I think those who had a history of being late in making payment won’t be included in the program.

    As for where the money is coming from, I think it can come from either profits from credit card transactions or financial charges that some members paid. It’s not a bad idea that credit card companies give back a little of their huge profits as rewards to encourage people to use their cards more.

  7. Dylan |  Oct 04, 2007 at 1:59 pm

    I think people with credit should be treated like adults. I have never been late on a cc payment and don’t need or want to be policed by advocacy groups looking out for people who cant control their own spending. I pay everything I can with credit for two reasons – the rewards and the organization. I see everything on one bill and pay it all electronically.

    I saw a new service came out already, but it seems more appealing than the AMEX program. It’s called Cardit — there is a fairly lofty per transaction fee but it sure beats $395 … I am trying to figure out a way to beat it with my Citi card. I probably won’t use it until I get a new card (0% intro APR) but Im glad to see the credit police taking a break. Some of us in the room are grown-ups.

  8. Cris Nale |  Oct 24, 2007 at 2:17 pm

    In addition to the AmEx program, you can now also pay your mortgage with a credit card at cardit… let me dig up the website…

  9. Dylan |  Jul 10, 2008 at 1:23 pm

    I used that site for a couple months but was having a hard time making the numbers work… I broke even in the end but not by much. Does anyone know what happened to it? In any case, I read an interesting story on Housing Wire yesterday and I think I’m going to try out the site they recommend:

    http://www.housingwire.com/2008/07/09/new-service-touts-mortgage-payments-by-credit-card/