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Can I Pay my Mortgage with a Credit Card?

If you have one of the best rewards cards in Canada, whether it’s cash back or travel points, you may want to spend as much as possible on your credit card. I feel that way too, which is why I barely carry cash at all anymore. So long as you pay off your bill in full and on time every month, putting your spending on credit can give you big rewards.

Some credit cards, like the Tangerine Money-Back Credit Card, have bonus categories for recurring bills. That includes things like your cell phone, cable, and internet bills; Spotify, Netflix, or Apple Music; or your car insurance.

Your biggest monthly expense is probably your mortgage, though. On a home price of $400,000 with a down payment of 20% and interest rate of 2.65% (the current best rate on RateShop.ca), your monthly payment would be $1,288. If you could get 2% cash back on that amount, you could earn $309 annually ­just from the mortgage payment. Alternatively, if you get 4 rewards points per dollar spent, that’s 61824 points a year!

It’s too bad that banks don’t take credit cards, then. You can normally only pay by pre-authorized debit.

Or do they? As it turns out, there are services available that allow you to pay any of your bills with a credit card.

 

How it works

The idea behind companies like Plastiq and PaySimply is that you pay them, and then they pay your bills or taxes for you with a cheque or wire transfer. You earn points on your card and the payee’s that don’t accept credit cards get paid the way they’d prefer.

There is a cost to use the service, however. Both of those services charge fees to pay your bills for you. Plastiq charges 2.5%, and PaySimply has different charges depending on how you pay.

 

Does it make sense?

Since PaySimply can only be used to pay taxes owed to the CRA, we’ll focus on Plastiq and their 2.5% fee.

 

Rewards

Monthly Payment

Monthly Rewards

Plastiq Fee

Total Rewards Value

Scotia Momentum Visa Infinite Card

1%

$1,288

$12.88

$32.20

-$19.32

BMO World Elite MasterCard

2 points

$1,288

$18.03

$32.20

-$14.17

American Express Gold Rewards Card

1 point

$1,288

$19.32

$32.20

-$12.88

American Express SimplyCash Preferred Card

2%

$1,288

$25.76

$32.20

-$6.44

Tangerine Money-Back Credit Card

2%

$1,288

$25.76

$32.20

-$6.44

 

As you can see, no matter what option you choose, there is no way to come out ahead when you try to pay monthly.

However…

 

Minimum Spend for Sign Up Bonuses

Some of the best sign-up rewards programs in Canada require you to spend a certain amount in the first three or six months of card ownership.

For example, the RBC Cathay Pacific Visa Platinum has a sign up bonus of 35,000 – so long as you spend $6,000 in the first three months. That level of spending ($2,000) is more than many Canadians can afford. But if you’re able to pay your mortgage with the card, you would already have $3,864 spent (based on the earlier mortgage described) – leaving you to make up just $2,136 over three months, which is much more manageable.

 

In that case, it would make sense to use Plastiq to pay your mortgage, but only for the first three months. After that, it’s better to just pay your mortgage normally.


Ali Ali 01/26/2019
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