How to Pay the Mortgage with a Credit Card for Free and Make Money Doing It

August 7, 2015 28 Comments »
How to Pay the Mortgage with a Credit Card for Free and Make Money Doing It

Back during the housing boom aka meltdown there were services that allowed homeowners to make their mortgage payments with a credit card.

These services charged fees for the convenience, and looking back, they were probably only offered because people couldn’t keep up with their mortgage payments.

Unsurprisingly, these services seemed to disappear as quickly as they surfaced, but there are still options to pay the mortgage with a credit card each month free of charge.

The difference today is that this method/idea is more about earning credit card points (or cash back) for paying your hefty mortgage payment, and not so much about simply paying it.

Let me preface this by saying it makes no sense to pay your mortgage with a credit card if you can’t afford to pay it otherwise.

The only purpose of this method is to earn points and/or cash back as you would on other purchases made with a rewards credit card.

You Might Be Able to Pay Your Mortgage with American Express Serve

Perhaps the easiest method I know of involves American Express Serve, which is referred to as a reloadable prepaid account.

In reality, it basically works like an online bank account in that you can transfer/load money to it and then pay everyday bills or make purchases with the associated prepaid card.

Let’s focus on that paying bills part. Your mortgage is a bill and it must be paid each month until maturity, just like other recurring bills.

But loan servicers don’t give homeowners the option to pay with a credit card (for good reason!) unlike most other bills.

The Serve method entails loading the account with a credit card, and then using the funds to pay your mortgage. I suppose you can use a debit card as well if it earns rewards.

The purpose of this is to get rewards on that large amount of money spent, so if the credit/debit card doesn’t earn rewards, there’s no point in doing this.

And you need to pay off your credit card in full each month to avoid any interest or fees to offset the benefit of doing it to begin with.

A couple warnings/issues with this method:

– You need to make sure your credit card issuer doesn’t charge fees to load Serve (American Express warns of this possibility on the website)
– The max you can load with a credit or debit card each month is $1,000 ($200 per day)
– The limit increases to $1,500 a month ($500 daily) if you get Serve with Softcard, formerly known as Isis Wallet
– You actually need to pay off the credit card charges to avoid interest/fees

As noted above, you can load your Serve account with a credit card, but even American Express warns that you could be charged fees by your card issuer for doing so.

I’ve used a Chase credit card and there was no fee or issue. It just showed up as a standard purchase.

But to avoid any mishaps, testing with a small amount or asking your credit card issuer to lower your cash advance limit to zero (or as low as possible) might be a good idea before giving it a whirl.

Once the necessary funds are in the Serve account, you’ll be able to see your available balance. Assuming it’s sufficient to cover your full mortgage payment, you simply select “Pay Bills” from the dropdown menu then add a payee.

While certain payees are already in Serve’s system, you’ll likely need to add your loan servicer manually, including their address and your loan number.

It should be the address where you would send a paper check because Serve is basically cutting a physical check on your behalf. It’s essentially a bill pay service. This is exactly why it works.

You’re not actually paying your mortgage with a credit card – rather, you’re funding an account with a credit card then sending those funds to your servicer via check, a much more accepted form of payment.

Once you save the payee information, you can make your mortgage payment via Serve each month. There’s even a memo section where you can write your loan number and any other details to ensure the payment is processed properly.

Note that payments can take several business days to process, so it’s not as quick as making a payment online. Fortunately, mortgage due dates are fairly flexible. But you’ll want to give yourself a cushion to avoid paying late if anything goes wrong.

Update: Serve doesn’t work for many people anymore, so take note that the above method properly won’t be an option going forward. In fact, they went as far as to just close a lot of people’s accounts.

Other Methods – Using Plastiq to Pay the Mortgage

There are some other companies that allow you to pay rent or the mortgage with a credit card in exchange for a small transaction fee.

By small fee, I mean something in the range of 2-3%. Recently, a company called Plastiq had a special where they charged just 1.75% ($17.50 per $1,000 in mortgage payment). They normally charge 2.5%.

Unfortunately, most credit cards don’t earn cash back or points at levels this high unless it’s in a bonus category. And these companies often aren’t in any bonus category whatsoever.

The one exception is the old AT&T Access More credit card, which earns 3X per dollar on all online purchases. That seems to include services like Plastiq. This allows you to come out ahead.

Even if you can’t come out ahead dollar for dollar, it might be worth it for some people looking to meet a minimum spending requirement to earn an opening bonus, or just to buy some time on that monthly payment (not recommended).

For example, if you need to spend $5,000 in the first three months to earn a bonus, paying the mortgage can probably put a big dent in that requirement. And it’s only $125 in fees if you use Plastiq for the entire amount.

Some other credit cards do earn 2%+ on all spending, either initially as a bonus or all the time, so it’s possible to come out slightly ahead or just slightly behind. Aside from making money doing this, some folks are happy just to earn lots of credit card points and miles by charging the pricey mortgage.

Plastiq currently accepts American Express, Discover, MasterCard, and Visa. However, Plastiq recently stopped allowing mortgage payments to be paid with a Visa card. That means you’re limited to the other three major issuers, which still isn’t bad.

Apparently Visa told Plastiq they had to comply with a new directive that banned mortgage payments via Visa credit cards. They’re basically closing a loophole because otherwise Visa would just allow it themselves.

It’s unclear if the others will follow, but it’s always a risk. For some reason, the ability to pay the mortgage with a credit card never seems to stick long-term, and perhaps for good reason.

If you do use Plastiq to pay the mortgage, you’ll need to enter the business name as it appears on your mortgage statement, along with the mailing address they list for mailed payments.

Assuming they have an electronic option (ACH) available in their system, payment will be sent electronically. If not, they’ll send a paper check on your behalf. If that’s the case, be sure to give it a week or two to arrive.

In terms of limits, the only payment limits are those associated with the credit card you use for payment. So if your card has a $5,000 credit limit, you won’t be able to send a mortgage payment for any more than that. This means even those with a large mortgage payment will likely be able to use this service, assuming they have decent credit limits.

I’ve yet to use Plastiq, but I may in the future if I need to meet a spending requirement to earn a bonus. I’ve heard of people successfully paying a Wells Fargo mortgage and a Chase mortgage with this service.

Use Tio to Pay the Mortgage with Discover, MasterCard, or Visa

mortgage billers

There’s a similar service called Tio (formerly ChargeSmart) now owned by PayPal that lets you make a mortgage payment with a credit card in a matter of seconds. You don’t even need to sign up.

All you have to do is select a mortgage company from the handy list on their website (pictured above), then enter your loan number and payment amount.

Tio

From there, simply click on the credit card icons and enter your credit card information. It will then display the fee, which tends to range between 2.5% and 3%.

Interestingly, they seem to charge varying fees based on payment amount and based on the mortgage company you select. It appears to be more expensive for smaller payments, such as 3% for $1,000 payments, and a bit cheaper as your payments rise.

If you’re okay with everything, you simply hit “pay this bill” and Tio will deliver your payment within 2-3 business days they say.

The upside is that Tio is super fast, the downside is it can be more expensive than Plastiq, and they don’t accept American Express for mortgage payments. However, they seem to still accept Visa.

At first glance, I like Tio more than Plastiq, at least when it comes to paying the mortgage, because they have tons of mortgage companies already listed and ready to go. I don’t like the idea of manually entering the wrong company or address when sending a very important payment.

Plus, they list tons of major mortgage companies like Chase, Citi, Ditech, Nationstar, Ocwen, PNC, Quicken, Wells Fargo, and many more.

The Downside to These (or Any) Methods

While it’s kind of cool to pay your mortgage with a credit card, it does require some work, as noted above. And if you have a jumbo mortgage payment, these methods may not work very well if your limits are low.

You certainly won’t want to send partial payments and find out that your loan servicer paid down your principal or simply returned your check.

It can also get murky if you use different methods to pay the mortgage, and then apply for a refinance. If the new lender asks for mortgage payment history and sees some of the payments made via credit card, they may question your solvency.

At the end of the day, you’ll have to ask yourself how much you’ll really “earn” by using a credit card.

If your monthly mortgage payment is $1,000 a month, it equates to just 12,000 points or miles annually, which is worth maybe $120 or slightly more if redeemed for travel or something more lucrative.

The earnings could also be used to pay down your mortgage a little bit faster if you put it toward the principal balance. In that sense, it could be worth it.

Just be careful not to miss a mortgage payment or make life harder in the process. Plenty can go wrong.

28 Comments

  1. Stu August 7, 2015 at 1:41 pm -

    Colin, you need to update your blog. American Express Serve does not let you upload using a Visa, Discover or Mastercard. They got rid of that option back in April 2015.

    Secondly, you are able to load using any Amex card but you will not gain any points. Thus, Serve has loss its purpose for “making money”.

    Amex doesn’t charge me to load Serve but I cancelled my card due to their removal of other major credit cards.

  2. Colin Robertson August 16, 2015 at 8:57 am -

    Stu,

    Actually you can still earn points/cash back via Amex co-branded cards and there are debit cards that also earn points/cash back. Just gotta read between the lines a bit and determine which cards work and which don’t. It’s also always in flux so you gotta stay on top of it and unfortunately I can’t detail every single card that works or doesn’t.

  3. Dan Okrasinski November 22, 2015 at 5:49 am -

    I used to be able to prepay my VISA credit card when I expected large charges while on vacation or to make unexpected purchases. A year or so ago my bank would no longer allow me to pay more credit card payments than I actually owed. I know I can always put the funds in my savings account for a work around (the bank charges you a fee if you make over 6 savings account withdrawals a month) so I could also prepay my checking account.
    I always liked taking a vacation or making an on the spot purchase knowing it was paid for in advance. Is there some way I could use your Am Ex bill pay system to prepay my credit card. B.T.W. my current bank has a loyalty point feature I would lose if I changed my credit card to AmEx. The last quarter yielded me over $200.00 to spend in their stores. That’s a nice perk especially since I pay my cr.card amount as soon as it comes due.

  4. Victor November 22, 2015 at 9:15 am -

    Colin, I agree with Stu. Your article is practically useless and outdated as of today. I checked out what you can and can not use to upload money to the Amex Serve, and think this service is useless to most people. It requires much effort for no gain. I think the only people who would find this helpful are those that for whatever reason do not have a checking account and access to bill pay. I do not see a cash benefit or ANY advantage to this paid service (must pay a fee for a 1% cash back on purchases ONLY) except to the American Express corporation.

  5. Colin Robertson December 1, 2015 at 12:07 pm -

    Victor,

    There are other ways to load Serve (debit cards) and earn more than 1% cash back…even 5% cash back on your mortgage. And many folks have Serve accounts with 2% cash back credit cards that still work. Amex just revamped all the Serve accounts so it’s a bit of a moving target but I find there’s always a way to earn a good return paying the mortgage through Serve.

  6. Eric December 25, 2015 at 8:11 pm -

    Does the Amex Starwood give you points for loading serve account?

  7. Colin Robertson December 30, 2015 at 9:54 am -

    Eric,

    I don’t think Amex cards earn points when you do Serve loads…that’s why it’s preferred to use Fidelity Amex (FIA issued) or another non-Amex card using the original Serve that allows the use of any credit card. Or alternatively load via a debit card that earns rewards (or that you loaded via a credit card that earns rewards).

  8. Roger Kostiw January 6, 2016 at 10:32 am -

    Hi Colin,
    I am interested in starting to accumulate miles, points and/or cashback, but haven’t taken the plunge. Can you tell me which credit cards work best for return results? Any advice would be appreciated. Then, I can put an application in. Thanks.

  9. Colin Robertson January 6, 2016 at 11:03 am -

    Roger,

    The quickest/easiest way to accrue a bunch of miles is to apply for a card with a big opening bonus, such as Chase Sapphire, Ink, or an Amex with a large bonus. Just make sure you have plans to use those miles or they won’t be worth as much as you think. Map it out first, compare offers, then apply.

  10. John January 8, 2016 at 8:58 am -

    I used my FIA to load my Serve card as described in this article, and I just got an email from Serve stating that because of “unusual usage patterns” I may no longer add money to my Serve account and should close it once the balance reaches $0. Has this happened to anyone else?

  11. Colin Robertson January 8, 2016 at 10:31 am -

    John,

    This happened to scores of people, and not just for that reason. Today Serve cracked down on a ton of accounts that had nothing to do with paying the mortgage.

  12. John January 24, 2016 at 11:57 am -

    Hi Colin,

    Thanks for writing this article. I’m looking at getting an amex card that has a spending requirement within 3 months to get bonus points. Can I use Amex serve to meet the spending requirement or will this not be a qualifying purchase?

    John

  13. Colin Robertson January 24, 2016 at 6:25 pm -

    John,

    In the past you could, but Amex recently shut down a ton of Serve accounts for loading via credit card so that method may no longer work. It’s odd since they allow credit card loads but apparently frown upon them as well if you don’t use your Serve account regularly for other purposes.

  14. James March 9, 2016 at 7:49 am -

    Colin, it’s time to pull this. Or please list the co branded Amex cards, otherwise this is a good idea but ultimately useless unless further explained and help your readers better set this up instead of giving theoretical suggestions.

  15. Alex March 13, 2016 at 1:34 am -

    Yes, please update with any available cards that work?

  16. Colin Robertson March 13, 2016 at 12:12 pm -

    Alex,

    One such way is to load Serve with a debit card (using PayPal Business Debit MasterCard), which once you apply for you can load with PayPal My Cash Cards that can be purchased from say CVS using an Old Amex Blue Cash credit card that earns 5% cash back. However, a lot of Serve accounts were recently shut down and PayPal can also be pretty temperamental so it may not last long. Still looking into new methods and will update this post accordingly.

  17. Paul Wozniak March 22, 2016 at 12:21 pm -

    Does not work because my mortgage company does not accept Serve as a payment.

  18. Colin Robertson March 22, 2016 at 12:42 pm -

    Paul,

    You should have the option to send a paper check to your mortgage company via Serve as well, and I assume most mortgage companies accept paper checks.

  19. Rich April 4, 2016 at 5:12 pm -

    Colin,

    Please explain the 5% cash back figure on the Amex Blue Cash card. Per their website, the card earns 3% on supermarket purchases, 2% on a couple of other categories, and 1% on everything else.

  20. Colin Robertson April 4, 2016 at 5:58 pm -

    Rich,

    The old version of Amex Blue Cash (not the new Everyday card), which you can still apply for, offers 5% cash back at supermarkets, gas stations, drugstores.

  21. Nathan Patterson June 13, 2016 at 2:17 pm -

    I’ve used this method for my rent payments for the last three months – AmEx Serve (legacy ISIS Wallet) loaded with a Fidelity Retirement Rewards AmEx. No fees, $30 a month contributed towards my kids’ college fund. Given that, I’m glad my rental agreement is about up as I suspect they would catch on after a few more months, given the comments and changes I’ve seen to the program. Now, to find a Visa equivalent… maybe I can at least keep paying my utilities. :)

  22. Colin Robertson June 13, 2016 at 2:53 pm -

    Well done Nathan…sadly, this method isn’t working for most folks anymore.

  23. Cj July 13, 2016 at 12:40 am -

    So I am trying to use my AMEX card and CITI card to recoup miles. When you are speaking of the option to get the wallet isn’t it seen as a cash withdrawal on the AMeX and CITI cards, thus not giving me the benefits and is there another way to pay all this using these cards.

  24. Colin Robertson July 13, 2016 at 8:08 am -

    Cj,

    The Amex Serve method was working for many people but then a lot them had their accounts closed. The money added was being treated as a purchase and earning points/cash back before that happened.

  25. Sara October 7, 2016 at 8:32 pm -

    The Serve Amex prepaid card states this on their fine print: “Serve Online Bill Pay are not purchases and do not earn Cash Back”. Therefore, I don’t see how you would be able to send a check to pay your mortgage and earn credit card points. Maybe before it could be done, but not now, at least not with Serve. Unless there is another way….

  26. Colin Robertson October 8, 2016 at 9:19 am -

    Sara,

    People earn cash back from the credit cards or debit cards that load Serve, not Serve itself.

  27. Robert Nelson March 12, 2017 at 2:51 pm -

    I am calling on behalf of my best friend James Greenhalgh. He wants to pay his mortgage using a credit card but they will not accept credit cards anymore! Unfortunately James has no computer skills whatsoever and he doesn’t even have a smart phone! So I looked up online how to pay mortgage without using credit card and it brought me to this site. It said something about using American Express Serve but then I read about a lot of people had trouble using this method! So that’s what I am trying to find out how my best friend James can pay his mortgage without using a credit card? I don’t understand him altogether but I don’t understand why he just doesn’t go to the bank and get the money from the credit card unless he doesn’t have that much money on the credit card but I did not ask in this question. Any suggestions I would truly appreciate! Thank you. Bob Nelson

  28. Colin Robertson March 13, 2017 at 8:26 am -

    Bob,

    As you said Amex Serve is/was a method but it doesn’t work for everyone these days. The reason he wouldn’t want to pull money from his credit card and then send it to the mortgage lender is due to the astronomical interest rate and any fees involved for doing so. The method outlined above only works if the transactions are treated as purchases on the credit card, so you can avoid any fees and/or high APR. In any case, it might not be a good approach if he doesn’t have basic computer skills.

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