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Question: Do you think credit cards are a good way to pay mortgages? Which one is the best?

A BuyandHolder

Answer:

Dear BuyandHolder,

There is no one-size fits all, universal answer to your question. It depends upon the size of your mortgage, the interest rate you are paying, the terms of the credit card and who holds your mortgage.

The New Credit Card Rewards Programs

What these new cards do is allow you to use points to pay down your mortgage and, in some instances, to reduce the credit card interest rate on unpaid balances.

Specific Cards

Credit card rewards programs related to mortgages are being offered by Citibank, Providian, GMAC and others.

For example, GMAC Mortgage has an arrangement with MBNA, a huge player in the credit card world, to issue a new MasterCard. Those who take out the card will earn one point for every dollar in purchases on the card. When cardholders gather up 2,500 points, $25 will be credited to the principal amount owed on a GMAC mortgage.

Citibank now has a Home Rebate Platinum Select MasterCard. It allows homeowners to us epoints to pay down their mortgage. The advantage here is that it can be used no matter who is your lender. Cardholders get a 1% rebate on card purchases.

Caution

Before you go this route, ask your accountant to crunch the numbers for you. And, think about your personal spending habits. If adding another credit card to your wallet means you're going to race out and buy more things to just to run up points, it's a big, big mistake.

For More Information

Visit www.BankRate.com for details and opinions on the various types of cards available, their interest rates and annual fees.

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