Paying off your mortgage isn’t easy
It takes years of hard work, careful planning and a lot of patience. However, if you use a credit card to pay off your mortgage debt, you can save on interest payments, earn rewards for making payments on time or even pay off your mortgage faster.
Before you run out and apply for a new credit card just so you can pay off your mortgage quicker – there are some things to know about using that little piece of plastic to make debt disappear.
Pay off your mortgage debt faster
If you have a mortgage, your interest payments are tax deductible. This means that if you’re in the 28% tax bracket and make $5,000 in mortgage payments each year, those payments can be deducted from your taxable income and reduce the amount of money that is taken by Uncle Sam.
This may not seem like a big deal at first glance: after all, why would anyone want to pay more than they have to? Well, as it turns out, it’s actually quite good for your bottom line!
Why? Because when you put money towards paying down debt (like a mortgage) instead of buying something new or investing it somewhere else (like stocks or bonds), what do we call that? Savings! And savings grow over time thanks to compound interest – which is where things get interesting!
Save on interest payments
The interest rate on a mortgage is typically higher than the credit card interest rate. The reason for this is that credit cards are backed by some of the strongest financial institutions in the world and have very low default rates. Mortgage lenders have no guarantee that you’ll be able to pay them back, so they charge more for the risk associated with lending money to homeowners.
On average, credit cards have lower APRs (annual percentage rates) than mortgages do–usually around 15% versus somewhere between 4%-6%. Credit card APRs are also fixed; meaning if you open an account today at 18%, it will stay at 18% until you pay off your balance or reach maturity (whichever comes first). A variable-rate mortgage has no set limit or cap on how much its APR could increase over time; this means if there were another housing crisis like 2008 tomorrow, homeowners could see their monthly payments skyrocket overnight without warning!
Earn rewards for making payments on time
If you’re a cardholder and have been making payments on time, then you may have earned some rewards. Most credit cards offer cash back or other perks such as travel discounts and car rental insurance. Rewards can be redeemed for cash or merchandise and are a great way to earn money back on everyday purchases.
If you’re using a rewards credit card to pay off debt faster, here are some tips:
- Make sure that the rewards program matches up with your goals (e.g., if your goal is paying off debt fast then choose one that offers higher rewards)
- Make sure that there aren’t any annual fees associated with using this type of account (many cards charge annual fees but also provide incentives such as travel discounts)
Using a credit card to pay your mortgage down can be a smart move.
You can use a credit card to pay your mortgage down faster and save on interest payments.
- You’ll earn rewards for making payments on time.
- If you have good credit, it’s possible to get a 0% introductory APR offer for up to 18 months (or more). That means that if you have an outstanding balance on your mortgage, it could be cheaper for you than other options like refinancing or paying off the loan in full with one lump sum payment.
Mortgages are a big part of many people’s lives.
They can be expensive and take up a lot of your monthly budget, but they also give you the opportunity to own your own home. If you want to pay down this debt faster or save on interest payments, then using credit cards for your mortgage payments may be a good idea. You’ll still need to make sure that paying off this type of debt doesn’t get out of control, but as long as it fits into your overall financial plan, then there shouldn’t be any problems!