This is really good news for the people who like to use their “plastic cards” to get rewards.
There are quite a few people who don’t keep balances in their credit card and only use the card to take advantage of the points or rebates. These people would normally pay the balance off before the monthly interest charges kick in.
I’m sure that those people are already drooling for this good news. Imagine the rewards that you’re going to get on a $36,000 ($3,000 per month)annual volume purchase!!.
For the first time in the mortgage industry, a mortgage lender will accept monthly mortgage payments on a credit card courtesy of American Express (Amex). Thus, allowing consumers to charge monthly mortgage payments, making them eligible for perks such as airline and hotel points, cash back, and retail discounts.
However, only a handful of lender has participated in the program. The first to announce is American Home Mortgage (AHM) of Melville NY. Indy Mac Bancorp Inc of Pasadena will follow suit later on this year. Amex is recruiting other lenders in the more than $1 trillion market.
But don’t get excited just yet because the program only applies to all Amex cardholders who are taking out new mortgages for buying a home or refinancing a qualifying loan offered by AHM. For an initial $395 fee, cardholders will have their recurring monthly payments charged automatically to their Amex “plastic” card. For the AmEx cardholders who choose the company’s rewards program, a $3,500 monthly mortgage payment will earn an adequate amount of points in a year good enough to get a free airline tickets, free hotel accomodation, a portable video player, etc., company officials said.
In addition, program enrollees receive a package of unique benefits including access to premium service with a dedicated loan sales and processing group and an exclusive set of home-related offers from AmEx merchants. The offers include such savings as $15 off orders of $100 or more at Brookstone; $200 off purchases of $1,000 or more at Design Within Reach; $20 off purchases of $100 or more at Linens ‘n Things, among others.
With the high cost of housing, translating to a high monthly mortgage payment, this is good news for new homebuyers and for those who will be refinancing. Just a word of precaution, though, consumers should be careful to make sure that they make their credit card payment on time just like they are supposed to pay the mortgage – every first of the month. Sometimes we come into this mentality of not paying it immediately and find ourselves having to pay more in interest charges. Remember, an interest rate between 10% and 18% on a $3,500 payment can offset any perks that you will be getting.