Two Credit Card Companies Want You To Pay Your Mortgage With Their Card. Is It A Good Idea?

As a financially savvy individual, you're always on the lookout for ways to maximize your rewards and benefits. Two credit card companies, Bilt and mesa, have recently introduced cards that allow you to pay your mortgage with a credit card, offering unique rewards structures and benefits. But is it a good idea to pay your mortgage with a credit card? Let's dive into the details and help you make an informed decision.

Rewards Structures and Annual Fees

*Bilt Mastercard*
- Offers 1x points per dollar on rent, up to 100,000 points a year.
- Provides 2x points on travel and dining, and 3x points on groceries and select streaming services.
- No annual fee.

*Mesa Homeowners Visa® Signature Preferred Credit Card*
- Offers 3x points on home-related purchases, 2x points on everyday essentials, and 1x points on mortgage payments (up to 100,000 annually) when spending a minimum of $1,000 monthly with the card.
- Offers benefits worth over $800 in value, such as home improvement credits and memberships.
- No annual fee.

*Traditional Mortgage Payment Methods*
- Typically, there are no rewards or points associated with paying mortgages through bank transfers, checks, or money orders.

Beneficial Demographic

Homeowners who are financially stable and can pay off their credit card balances in full each month would find these cards most beneficial. This demographic includes:

* Homeowners with a good to excellent credit score (670 to 850).
* Homeowners who have a significant portion of their monthly budget allocated to housing expenses, as they can maximize rewards by paying these expenses with the credit card.
* Homeowners who value the flexibility and convenience of paying their mortgage with a credit card, as long as they can manage their finances responsibly.

Potential Risks and Pitfalls

While using credit cards to pay mortgages can be a strategic move for maximizing rewards and benefits, it also comes with potential risks and pitfalls. Homeowners should be aware of these risks and take steps to mitigate them:

1. Interest Accrual: Mortgage interest rates are significantly lower than credit card interest rates. If a homeowner carries a balance on their credit card after making a mortgage payment, they will incur high-interest charges that can negate the value of any rewards earned. To mitigate this risk, homeowners should ensure they pay off their credit card balance in full each month.
2. Credit Utilization: When a homeowner uses a credit card to pay their mortgage, the credit limit on that card will be reduced by the amount of the mortgage payment. This can increase the credit utilization ratio, which may lower the homeowner's credit score. To mitigate this risk, homeowners should ensure they have large credit limits and keep their utilization ratio low. Using a business credit card, which is not reported on personal credit reports, can also help maintain a lower utilization ratio.
3. Fees: Many credit cards charge a fee for paying mortgages, typically as a percentage of the payment amount. Homeowners should consider whether the rewards they earn from the transaction outweigh the fees they pay.
4. Minimum Spending Requirements: Some credit cards offer welcome bonuses that require meeting a minimum spending requirement. Paying a mortgage with a credit card can help homeowners meet these requirements. However, homeowners should ensure they can meet the spending requirement without incurring unnecessary fees or interest charges.

To maximize the benefits of using credit cards to pay mortgages, homeowners should:

* Pay off their credit card balance in full each month to avoid interest charges.
* Maintain a low credit utilization ratio by having large credit limits and using business credit cards when possible.
* Consider the fees associated with paying mortgages with a credit card and ensure the rewards outweigh the fees.
* Use credit cards strategically to meet minimum spending requirements for welcome bonuses.
* Be aware of the risks and pitfalls associated with using credit cards to pay mortgages and take steps to mitigate these risks.

In conclusion, using credit cards to pay mortgages can be a strategic move for maximizing rewards and benefits, but it also comes with potential risks and pitfalls. Homeowners should carefully consider the rewards structures, annual fees, and potential risks before deciding whether to pay their mortgage with a credit card. By understanding the benefits and risks, homeowners can make an informed decision and maximize the benefits of these cards while minimizing the associated risks.