As someone who is always looking to maximize the rewards I get from credit cards, I am always irritated when certain billing parties don’t allow this as an option. The primary offenders, of course, are mortgage lenders, who insist that you pay them using your bank account rather than a credit card. Some people have been able to set up automatic payments with a credit card for their mortgage, but for the average person, this will probably not be an option. Banks simply aren’t willing to pay the transaction fees required for processing credit card payments. There is a way to do this, however, using a financial intermediary.

Most of what I’ll share in this article was sourced from this Frugal Travel Guy article. The way to indirectly pay your mortgage with a credit card is by using a prepaid Target REDCard. Here’s how it works: go to your local Target and pick up a prepaid REDCard (by American Express), and then go to the cash register to load it with your rewards earning credit card. You can load up to $2,500 per day or $5,000 per month. Once you’ve loaded your card, you’ll want to register it online, and then you can use the online portal to pay bills, including your mortgage. Since your mortgage is typically your largest monthly expense, this will greatly increase the rewards you’ll be earning each month.

Not all Target stores carry this product, so be sure to check for the nearest participating store here. There are no currently participating stores in Georgia, so for now I’m unable to use this card. I’m exploring alternate options such as American Express Serve and AccountNow, but it looks like there will be fees involved. I may post a subsequent article if I find a good alternative to REDCard. It appears that you’ll need to go to a store each time you wish to reload your card. Hopefully in the future there will be an option to add funds using your credit card online.

If you’re trying to maximize your rewards, however, take this technique to its logical conclusion. Rather than using this to pay your mortgage, simply load $5,000 every month with your best rewards credit card, and then use the REDCard to pay off your credit card. While this will increase the rewards you receive, the real magic comes with the fact that you’ve now artificially increased your monthly spend on your credit card. This allows you to clear larger signing bonuses than you otherwise would have. A lot of the best rewards require $5,000 or even $10,000 spend in the first three months. Also, more credit cards are offering bonuses based on annual spend, i.e. spend $25,000 in a given year and get an added bonus. For a list of other ways to put more of your spending on credit cards and artificially increase your monthly spend, see here (N.B. some of the advice is out of date, such as Bluebird and Amazon payments).

Logan Hertz works as a business strategy consultant in Atlanta and freelances as a personal finance expert. If you are interested in clever, easy ways to increase your income and reduce your costs, email him.

© 2015 Logan Hertz – permission to reprint is gladly given, provided the author is given credit