NOTE: AS OF MAY 6th, 2015 THIS POST IS NO LONGER ACCURATE. THE TARGET REDCARD NO LONGER ACCEPTS CREDIT CARD LOADING.
Why would I want to pay my mortgage with a credit card?
The biggest reason is to earn award points on your award credit card for something that you would’ve normally paid from your bank account. This method can also help you reach the minimum spend on a new bonus credit card. Usually there are bills that you have that can’t be paid with a credit card, but this method eliminates that and allows you to start earning award points on nearly every bill that you have.
There are numerous ways to pay your mortgage with a credit card. But not many get easier then the one I am about to describe. You can not only pay your mortgage with a credit card, but you can pay your car loan, your rent, and many other things that do not take credit card for payment.
There are a few prepaid debit cards that allow you to fund them with a credit card. The basic premise is this: you get yourself a free (or low cost*) prepaid debit card that has bill paying features (think of it as a bank account). You then load that prepaid card with your credit card. Loading takes funds from your credit card, and puts those funds into your prepaid debit card account. The prepaid account does have an actual debit card associated with it that you can use like a credit card, but we don’t care about that. What we care about is using the funds we loaded into the account to pay our bills. That is where the bill pay feature comes in. Once you have loaded your account, you can immediately pay bills, like your mortgage – for no fee. So you have effectively earned points on your credit card (for the loading cost), and still have full access to that money. You could even pay off that credit card with the bill-pay feature of the prepaid account, for a net-zero cost, and award points to show for the effort.
So what is the prepaid debit card I speak of? It is an American Express card offered through Target. It is called the Target Prepaid REDCard (or more affectionately known as “RedBird” in the travel hacking community). Be careful! Target offers several types of “REDCards”, some branded with American Express, that are NOT prepaid. You want to make sure you get the “ Target Prepaid REDCard” (prepaid is the key). You can pick these up at select Target stores (usually near the cash registers). As of this writing, they have not rolled out nationwide yet. You can find a list of Target stores that have them here (in the “What retailers sell the Prepaid REDcard?”.
Once you find a participating location, find the card and take it to a register to make your “initial load”. The cashier will ask how much you want on it. Your initial load can be anything up to $500 (larger loads are available later). Use your award credit card to make this initial load. Now you have a “loaded” prepaid REDcard. This card is a TEMPORARY card. You need to take it home and complete registration here. Once you have registered your card, you will be mailed your permanent REDcard. This permanent card can be taken to Target and loaded up to $2500 a day for no more then $5000 per month. Unfortunately no loading transaction can exceed $1000, so here is how a typical load goes:
Hand your permanent REDcard to a cashier and tell them you want to load the card. They will swipe the card and ask you “for how much?”, since you cannot exceed $1000 in each transaction, tell them $1000. They will then ask you for your payment method – give them your award earning credit card. It is paid for like a normal purchase, a receipt will print. Now you can ask them to do it again, they will swipe the REDcard again, ask “how much?”, tell them $1000, give them your credit card to pay – sign, get your receipt. Now ask them to do it one last time for $500 (2500 is the max in one day). You now have $2500 in your account that you can pay bills with online. Come in the next day and do it again for another $2500, now you can pay up to $5000 in bills. It is important not to exceed $1000 in a transaction, $2500 in a day and $5000 in a calendar month. Those are the maximums! I would suggest making 3 transactions that are not 1000, 1000 & 500. They tend to trigger a fraud alert with your credit card. I usually do something along the lines of 950, 850 & 700. On occasion, I will still get a fraud alert, but I can call in quickly while at Target and clear the alert, and run the transaction again.
Now you can go into your account and pay bills with the money you loaded! So you have effectively paid your mortgage with a credit card. You can also transfer the money our of your REDcard account to your bank, or withdraw cash from a network of ATMs. All free of charge.
There are also additional benefits to the REDcard. You can use it as your method of payment at Target to receive 5% off of your purchase. Use on on Target.com for 5% off and FREE shipping! Plus, you get an extra 30 days for returns.
NOTE: This method will not last forever. When paying for things with a credit card, there are fees involved. Since you aren’t paying them, that means the merchant or bank is absorbing those fees. Obviously this is known to the merchant (Target in this case), but they are willing to absorb these costs to get people used to using their credit products. Once they feel they have enough people using their product, they will remove the option to load with a credit card. How long before this happens is unknown.
* Some Targets charge[/fusion_builder_column] $5 for the initial purchase of the card, some have it free.[/fusion_builder_row]ial purchase of the card, some have it free.[/fusion_builder_row]