Paying mortgage with credit cards: Is it a good idea?

Avoid foreclosure. Using your credit card to avoid foreclosure is definitely not recommended, since adding credit card debt on top of missed mortgage payments is not likely to improve your situation.

Factors to consider when paying off mortgage using credit card

Paying off your mortgage using a credit card might not be worth it for your credit, your budget, or both—even if you can figure out a way to do so. Before choosing that option, here are some factors to consider:

Fees vs. rewards. Earning rewards on your mortgage bill—which is usually significant—can make it tempting to pay off your mortgage with a credit card. However, your earnings may be eliminated by the price of a third-party processing fee. For example, you will end up paying $71.25 extra every month if you have a mortgage payment of $2,500 and you are paying a 2.85% processing fee.

Cost of interest. If you fail to pay your credit card bill off completely each month, you will incur costly interest charges by putting your mortgage payment on a credit card. The long-term costs of increasing ongoing balances would certainly cancel out any rewards you might earn from using your credit card.

Effect on your credit scores. Using your credit card to make mortgage payments could potentially use a significant portion of your credit limit and increase your credit utilization ratio, which compares your total credit limits with your total debt. Your credit utilization ratio significantly affects your credit scores. Since you want to ensure your ratio is lower than 30%, making mortgage payments that cost thousands of dollars will likely have a negative impact.