A Question for the Financial Gurus....

[cardiac]

Do the credit cards that reward you with points or cash back give you these points on card use such as paying your mortgage with it?
If I use this to pay my mortgage, utilities, etc., I can rack up quite a few points a month.

Also, I have enough put away in mutual funds to pay off my mortgage. The interest on the mortgage is right at 5%. Right now I am not quite making that on the mutuals. I also have to take into account the tax deduction on the mortgage interest. What say ye?

I am in the black on my finances and am looking for little ways to pull further ahead.

Thanks!

Bob

 

[Gunslinger08]

It would be tough for me to not pay off my mortgage if I had enough liquid assets to do so.

 

[Cal166]

I don't think you can pay your mortgage with your credit card....I would totally be down for that.

 

[Blackjack200]

Your bank will not let you pay your mortgage with a credit card. The way you get all those rewards is that the merchants you use your cards with pay hefty fees for the privledge of accepting them. If the bank took a credit card for your payments they would be out hundreds of dollars a month.

I would not pay off the mortgage. From that 5% subract your marginal income tax rate and that is the true rate. So if you're in the 28% tax bracket 5% * .72 = 3.6% - a rediculous bargain. That doesn't necessarily mean that the mutual funds are the right place for the money either, but keeping the money out of the house leaves you wil a lot of extra flexibility.

 

[kami333]

Not without paying a bunch of fees. Unless you get 5%+ in cashback it's not going to be worth it. I remember Amex and Indymac had some kind of program a few years ago but that's probably gone.

As far as utilities goes, yes you can get rewards, but still remember to calculate extra processing fees. The only one I pay by credit card right now is Time Warner and our cell phone bill, but I did pay gas and electric in our old state where the utilities didn't charge a service fee.

 

[Gunslinger08]

I pay the bills I can by credit card. That includes car insurance, cell phones, TV, and internet. None of them charge a convenience fee and most actually promote auto-pay.

 

[spidey07]

Read the fine print. Most all cards have a cap on points/cashback.

 

[sjwaste]

I wish I could pay my mortgage with a credit card. That's my single biggest expense by a long shot.

 

[kranky]

Can't put a mortgage payment on a credit card. But charge everything else you can and get the cashback. I like the Pentagon Federal Credit Union card because it gives you cashback automatically every month right on your statement, no caps. I don't want points or miles because those programs can change at any time, and it takes time to accumulate points/miles.

Personally I think it's a good time to hold onto as much cash as you can. I would not transfer savings into paying off the mortgage now. It's not worth the tiny (really tiny) savings to tie up money in a house when you can't get to the money on demand.

Now, if you owe $20,000 on a mortgage and have $500,000 in savings, that's different.That would make an insignificant dent in your savings.

 

[Gibson486]

well, couldn't you pay mortage with those checks your CC gives out?

 

[cardiac]

I figured that you couldn't pay the mortgage with a CC, but hey, we can try.....

Blackjack, thanks for the calcs. That's kinda what I figured. I am going to just keep paying the monthly mortgage. I do pay 2 extra payments a year on the principal. I get paid every other Thursday, so there are 2 months every year that I have 3 paydays and I became disciplined quite a few years ago to put that on the house principal. I am 50 and want to completely retire by 55. The house will be paid off by then, I have 6 figures in mutual funds, the life insurance is adequate, and I will have a decent pension. Now if I can just figure out how to get college paid for both my boys.....

Thanks!

 

[KB]

I would not sell the mutual funds to pay off the house at this time. The mutual funds should begin a greater return than 5% in the near future if they haven't been doing so over the last year. Since 2009, mine have returned 8 - 20% a year after losing 40% in 2007 - 08.

Its also nice to have a lot of money available in case of emergency.

 

[Gunslinger08]

Now if I can just figure out how to get college paid for both my boys.....

State school + student loans. My parents didn't pay for any of our college bills and we're all doing just fine. I've got no problems paying my $130 a month for the college education that allowed me to get a good job.

 

[Blackjack200]

State school + student loans. My parents didn't pay for any of our college bills and we're all doing just fine. I've got no problems paying my $130 a month for the college education that allowed me to get a good job.

I'd even go a step further and say community college for two years, then state school. I'm taking classes right now at a community college and it's ~$100 per credit all in. That's an amazing bargain.

 

[cardiac]

State school + student loans. My parents didn't pay for any of our college bills and we're all doing just fine. I've got no problems paying my $130 a month for the college education that allowed me to get a good job.

That is probably the way it will play out. We have 3 good schools near us: Indiana U, Purdue, and Ivy Tech. Oldest son wants to get into graphic arts of some sorts, and the younger son wants to become an engineer (Mechanical most likely). I do have quite a few series I bonds saved for college.....

Bob

 

[sdifox]

well, couldn't you pay mortage with those checks your CC gives out?

bad idea, them be cash advance.

 

[dquan97]

well, couldn't you pay mortage with those checks your CC gives out?

Only if the cash advance check is 0% fee with 0% rate (very rare)

 

[DaWhim]

why bother paying off ur mortgage? money paying off can be invested else where.

 

[TwiceOver]

Pay the mortgage. The tax deduction isn't worth what you are paying in interest.

 

[JTsyo]

It's not a all or nothing either. You can keep enough of funds for emergencies and use the rest to take a big bite out of your mortgage. If you are already on track to payoff the mortgage in 5 years, it might not be worth it. Pay another 4 years and then just close it off with a lump sum payment.

 

[cardiac]

Pay the mortgage. The tax deduction isn't worth what you are paying in interest.

The interest on the note is only 4.9%. Blackjack2000 had calculated it and it seems right to NOT pay it off. I'll run it by my nephew the next time I see him (CPA-MBA - Don't know if he's any good ).

I do have an emergency fund of 4 months of complete living expenses, and also keep an extra $1000 in my gun safe for emergencies.

Thanks,

Bob

 

[classy]

Do the credit cards that reward you with points or cash back give you these points on card use such as paying your mortgage with it?
If I use this to pay my mortgage, utilities, etc., I can rack up quite a few points a month.

Also, I have enough put away in mutual funds to pay off my mortgage. The interest on the mortgage is right at 5%. Right now I am not quite making that on the mutuals. I also have to take into account the tax deduction on the mortgage interest. What say ye?

I am in the black on my finances and am looking for little ways to pull further ahead.

Thanks!

Bob

That is a terrible idea. The last thing I would ever worry about paying off unless I had a lump sum of CASH is the mortage.

 

[DominionSeraph]

I wouldn't abuse credit cards for the rewards. As has already been pointed out, you're being given a small reward so you'll screw your supplier and make money for your credit card company.

Why make the middleman bankers rich while they sit on their asses collecting fees on your transactions? In the end, it's you who's paying for their mansions, yachts, and Mercedes.

 

[OCGuy]

It would be tough for me to not pay off my mortgage if I had enough liquid assets to do so.

Really? With rates where they are now, you could have a 15yr fixed in the 3.75% range, and get a much better return with your cash.

 

[cardiac]

That is a terrible idea. The last thing I would ever worry about paying off unless I had a lump sum of CASH is the mortage.

I am trying to gear up towards retirement, which the income will be about 65-70% of what it is now.

I have no other debt. No car payment, no credit cards (Might be $100-200 on it), no loans. That's why I was thinking of doing a clean sweep and get rid of all my monthly bills except for utilities.

Bob