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Pay down your Mortgage with CC Points

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    Pay down your Mortgage with CC Points

    **WARNING: Consider this ONLY if you can responsibly handle a Credit Card**

    This may have been posted about previously, but I couldn't find a note about it, so I thought I would add one.

    I opened new accounts at Wells Fargo the other day. Nothing special. We have a new mortgage with them, and had been looking to consolidate and move our banking services anyhow. At WF, it will allow me to efficiently manage extra principal payments against the mortgage and bring in my business accounts, etc.

    So the banker mentions that I am eligible for a new WF credit card... blah, blah, blah. At least that's what I heard. I wasn't really interested because we are finally at a point where we dont really use credit cards, with the exception of a grocery card that we use for groceries and gas, and get a percentage back in store dollars. I set a weekly recurring payment that automatically pays down the balance on the card an amount roughly equivalent to the amount we spend in a week. (had to stop this program when we moved, because they dont have those stores here)

    Anyhow, the banker continues talking, and I caught the part where she says "automatically pays 1% against your mortgage principal"! No that's what I'm talking about! A card that pays me back, 1% of spend, no annual fee, no need to request reward checks, just an automatic post against the principal of my mortgage every time the reward balance reaches $25!

    I ran some quick calculations of what I could potentially pay with the card, and I figure with standard bills, that we currently pay now anyway, I could reap about $500 a year against my principal. Not big money, but by the time we would finish paying down the mortgage, God willing, in 5-6 years, we could have earned the equivalent of 1% off our mortgage principal! That's not even counting the occasional major expense, like appliances or electronics.

    And yes, I will set it up with recurring weekly payments again to avoid interest (which would diminish the advantage), but I think it is pretty cool.

    If anyone is interested, here is the link to the WF card details. (https://www.wellsfargo.com/credit_cards/home_rebate/) I am sure other institutions can be found to offer similar products.

    #2
    You only need to pay the statement balance every month to avoid interest. There is no need to pay every week -- and it might actually make things more confusing since different charges post at different times. That's why the cc company doesn't send you your statement until about a week after your billing cycle closes... So they can make sure that all the charges have cleared.

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      #3
      Originally posted by BuckyBadger View Post
      You only need to pay the statement balance every month to avoid interest. There is no need to pay every week -- and it might actually make things more confusing since different charges post at different times. That's why the cc company doesn't send you your statement until about a week after your billing cycle closes... So they can make sure that all the charges have cleared.
      I understand. That's why my goal is to float about a week. I create a recurring payment of, say $400 to be sent every Friday. This amount may equate to what would be spent in the previous week on average. Some weeks it will be more, some week's less. I just keep an eye on it to make sure it doesn't start to accumulate a balance that is much more than the next week's payment.

      Essentially, I am converting a credit card into a debit card that is tied to an account that I contribute money to every week. The outstanding balance, after the weekly payment, would never be more than a couple hundred bucks. Nothing incurs interest, and I dont have to remember to send a huge payment at month's end. I see the transactions when they post to my financial software and can manage the budget accordingly, just as I would with a debit card.

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        #4
        Wells Fargo has been offering me that card for a little less than a year being our mortgage is through them. I thought it was good idea, but I really don't use my credit cards that often and would take us forever to get enough points for their minimum to get the points applied.

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          #5
          I did this for a while when I had my mortrgage with Countrywide. I recieved 2% on all spending on my Countrywide card and applied the rewards to my mortgage.

          Now, I just deposit rewards checks into my car fund.

          Comment


            #6
            I guess technically this can work but sounds like a hassle keeping track of the payments to the card so you don't accrue interest and also tracking what they pay towards your mortgage.

            There are other cards that will give you cash back which you can then use however you want and they come with better terms than Wells Fargo can give you.

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              #7
              I just cancelled that card today. This is what I had issues with - 1. It takes 6 to 8 weeks to post to your mortgage. 2. It doesn't get applied until there is enough to constitute a payment. Therefore, I would have to accumulate over $1500 to get to one payment. This means I would have to spend $150,000 which would take me over 10 years to do.

              I'm switching to Amex BlueCard which is currently giving 6% on grocery, 3% on gas and 1% everything else.

              Comment


                #8
                Originally posted by gattaca View Post
                I just cancelled that card today. This is what I had issues with - 1. It takes 6 to 8 weeks to post to your mortgage. 2. It doesn't get applied until there is enough to constitute a payment. Therefore, I would have to accumulate over $1500 to get to one payment. This means I would have to spend $150,000 which would take me over 10 years to do.

                I'm switching to Amex BlueCard which is currently giving 6% on grocery, 3% on gas and 1% everything else.
                I have the card too, and the reward points get applied once you reach $25, not once you accumulate an entire mortgage payment. So that's $2,500 in charges, not $150,000.

                I tend to reach for my Chase Freedom. The rewards are better than with the WF mortgage rebate card. I have an AmEx rewards card too (not the one which you have), but I have never used it.

                I like your strategy, fe2o3ez. I call it "mortgage chipping". Best of luck to you with your plans.

                Comment


                  #9
                  Originally posted by Petunia 100 View Post
                  I have the card too, and the reward points get applied once you reach $25, not once you accumulate an entire mortgage payment. So that's $2,500 in charges, not $150,000.

                  I tend to reach for my Chase Freedom. The rewards are better than with the WF mortgage rebate card. I have an AmEx rewards card too (not the one which you have), but I have never used it.

                  I like your strategy, fe2o3ez. I call it "mortgage chipping". Best of luck to you with your plans.
                  My idea of "mortgage chipping" is to round my payment up to the next 100, so I'm paying $1,000 a month instead of $956.34.

                  Comment


                    #10
                    I'm with you DebtFree&Broke...
                    Our mortgage is 1086, so each month we pay 1200....sure is nice to see that principal balance go down quicker than a few hundred a month.

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