In an unprecedented move, American Express has announced that it will allow homeowners to make mortgage payments using their American Express credit cards.
American Express is touting the program as a way to earn additional credit card rewards more quickly, while critics see it as a mere gimmick to get more cardholders to make recurring payments using their credit cards.
While American Express was spinning its PR wheels, immediate reactions to the news were skeptical, with many analysts wondering why mortgage lenders would pay the more than 2 percent transaction fee American Express charges.
Critics also questioned the credit risk associated with making a mortgage payment with a credit card, especially during a vulnerable period for the industry.
An American Express spokesperson was quick to respond, stating that only the most creditworthy consumers will be able to utilize this service.
So far American Express has signed up one mortgage lender, American Home Mortgage Corp., and plans to bring on IndyMac in the coming months.
Unfortunately American Home Mortgage closed shortly after I wrote this article. Oops.
Analysts believe the program will only appeal to a small percentage of cardholders, especially with the $395 sign-up fee to enter the “Express Rewards Program”, and the limited list of eligible lenders.
At the same time, it could be the dawn of a new era in how credit cards are viewed, and ultimately used. The news comes on the heels of another interesting release by American Express, the American Express Clear Credit Card, which has no fees whatsoever.
Update: New service launched allows mortgage payments via credit card using Discover, Mastercard, or Visa.