Using Credit Card for Mortgage Payments: What You Should Consider

 

If you’ve taken out a mortgage, missing repayments can cause more than just late fees. Overdue payments can also show up as defaults on your credit report, potentially affecting future loan approvals.

Lenders are also specific about how you repay your home loan. While cheque payments were once common, most now prefer electronic funds transfer (EFT). Using a credit card might sound convenient, but it’s usually not allowed.

 

Can You Pay Mortgage Repayments with a Credit Card in Australia?

In most cases, lenders in Australia do not accept credit card payments for mortgage repayments. They treat these transactions as cash advances, not standard purchases. This means:

• Interest is charged immediately, often over 20% per annum

• A cash advance fee applies—usually a fixed rate or a percentage of the withdrawn amount

Using a credit card to pay your mortgage should only be a last resort—for example, in short-term cash flow emergencies.

 

A Smarter Workaround: Freeing Up Cash for Mortgage Repayments

Instead of paying your mortgage directly with a credit card, consider using your card for day-to-day expenses—groceries, utilities, shopping, even your morning coffee. This frees up cash in your bank account, which you can then use for your mortgage repayment.

Many credit cards offer up to 55 days interest-free. If you repay the full amount by the due date, you’ll avoid interest charges and potentially earn rewards points. However, this method only works if you’re financially disciplined and don’t carry a balance.

 

How Can You Pay Your Mortgage with a Credit Card?

Although lenders generally don’t accept direct credit card payments, you can use indirect methods:

1. Third-Party Bill Payment Services

Platforms like Easy Bill Pay let you pay bills (including your mortgage) using your credit card. These services act as intermediaries. You nominate the bills, and they process payments using your card.

⚠️ Note: Fees apply. Easy Bill Pay, for instance, charges around $24.95/month, plus potential fees for large transactions or top-ups.

2. Cash Advance to Pay Mortgage

Another option involves using your credit card to withdraw a cash advance, then using those funds to make the mortgage repayment.

But beware:

• Not all cards offer cash advances

• There are no interest-free days

• You’ll face higher interest rates and additional fees

 

Key Risks of Paying Your Mortgage via Credit Card

Even if your lender or third-party provider allows it, consider the downsides:

1. High Interest and Fees

Cash advances incur interest from day one—often at higher rates than normal purchases. Some cards also charge a cash advance fee, adding to your costs.

2. Debt Spiral

Using credit to repay debt creates a risky cycle. Swapping low-interest mortgage debt for high-interest credit card debt could lead to debt escalation. If not managed well, this can snowball into financial stress.

3. Third-Party Charges

Apps like Easy Bill Pay aren’t free. Their service fees may outweigh any benefit you get from reward points or convenience.

4. Potential Credit Score Damage

Failing to repay your credit card in full can hurt your credit score. This could reduce your ability to refinance or secure loans later.

 

Final Thoughts: Should You Pay Your Mortgage with a Credit Card?

Short answer: No, unless it’s a temporary solution for a short-term issue.

The risks—high interest rates, fees, and debt growth—usually outweigh the benefits. Instead, look at alternative ways to manage cash flow, such as budgeting better or using offset accounts to reduce interest.

 

Summary Table