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I've wondered if it would be worthwhile to pay mortgage payments with a credit card to earn airline mileage. However, I just read an article that discussed using credit cards to pay your taxes and receive airline miles. The article noted that the IRS would not pay the credit card mechant fee (approximately 2.40 percent) and that the credit card holder would have to pay an equivelent "service" fee which might off-set all or most of the benefit in miles you received.
I would like to know if mortgage companies would also refuse the merchant fee. Thanks.
I know this is an old post, but I work for a bank and feel the need to answer in case anyone else has this question.
Forget about the fee for a moment. The question is does your bank accept credit card payments? Call them up an ask. If yes, then pay via credit card. If no, the reason they don't accept cards is most likely that they don't want to pay the merchant bankcard fee. Having a merchant bankcard account (i.e. having the ability to accept credit card payments) obligates them to pay the fee. In other words if they accept credit cards, then they acknowledge and are okay with paying the fee.
I used to pay my college tuition via CC (I did it to rack up points - I pay my cc in full each month). Then my college decided to tack on a 2.75% processing fee on all payments made by credit cards to recoup the fee they lost to the credit card companies, so I was forced to pay via check. That being said, your mortgage company might do the same. If so, then decline to pay, as the out of pocket costs on your part outweigh benefits with more airline miles.
If they don't accept credit cards, do not pay your mortgage with the credit card convenience checks they tend to send out every now and again. These checks will also earn you miles AND have no fee obligation on the part of the recipient (read: no merchant bankcard fee), but only because you'd be paying double the fees you normally do. Convenience checks are treated like cash advances, so in addition to any finance charges you may accrue, you're on the hook for a cash advance fee (imposed immediately and typically a % of the total amount). Again, the costs far outweigh the airline miles gains.
One other thing which bears mentioning. Even if your mortgage institution does accept credit cards for mortgage payments, unless you pay your credit card outstanding balance in full each and every month, I still wouldn't go this route.
If you do, you're simply borrowing from Peter to pay Paul, and Peter's credit terms (higher interest rate and no tax deduction) are much worse than Paul's.
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