Pay Mortgage with Credit Card Calculator
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Reviewed by Calculator Editorial Team
Paying your mortgage with a credit card can be a convenient option, but it's important to understand the costs and implications. This calculator helps you estimate the total cost of paying your mortgage with a credit card, including interest and fees.
How Paying Mortgage with Credit Card Works
When you use a credit card to pay your mortgage, the lender typically treats it as a regular payment. However, there are several factors to consider:
Interest Rates
Credit card interest rates are usually higher than mortgage interest rates. The average credit card APR is around 18%, while mortgage rates typically range from 3% to 7%.
Fees
Credit card companies charge various fees, including annual fees, foreign transaction fees, and cash advance fees. These can significantly increase the total cost of paying your mortgage with a credit card.
Payment Terms
Credit card payments are typically due within a certain period (usually 25 days) after the billing statement date. Missing a payment can result in late fees and damage your credit score.
Important: Paying your mortgage with a credit card is not recommended for most people. It's better to make direct payments to your lender to avoid high interest rates and fees.
Formula Used
The total cost of paying your mortgage with a credit card is calculated using the following formula:
Total Cost = (Mortgage Amount × (1 + Credit Card APR)ᴺ) + (Annual Fee × N)
Where:
- Mortgage Amount - The current balance of your mortgage
- Credit Card APR - The annual percentage rate of your credit card
- N - The number of years you plan to pay with the credit card
- Annual Fee - The annual fee charged by your credit card
This formula calculates the future value of your mortgage balance plus the total annual fees over the payment period.
Worked Example
Let's say you have a $200,000 mortgage, a credit card with a 19% APR, and an annual fee of $95. You plan to pay with the credit card for 2 years.
Total Cost = ($200,000 × (1 + 0.19)²) + ($95 × 2)
Total Cost = $200,000 × 1.38205 + $190
Total Cost = $276,410 + $190 = $276,600
In this example, paying the mortgage with the credit card would cost you $276,600 over 2 years, compared to the original $200,000 mortgage amount.
Frequently Asked Questions
Is it a good idea to pay mortgage with credit card?
No, it's generally not recommended. Credit card interest rates are typically much higher than mortgage rates, and you'll incur additional fees that can significantly increase the total cost.
What fees should I consider when paying mortgage with credit card?
Key fees to consider include annual fees, foreign transaction fees, cash advance fees, and any late payment fees if you miss a payment.
How does paying mortgage with credit card affect my credit score?
Using a credit card to pay your mortgage can negatively impact your credit score if you miss payments or carry a high credit utilization ratio.
Can I pay my mortgage in installments with a credit card?
Yes, but you'll need to make multiple payments within the billing cycle to avoid interest charges on the full balance.