Paying Down Your Mortgage With a Credit Card

Credit card users have been able to turn their reward points into airline tickets, new cars, hotel rooms, even groceries. Now they can also use the rewards to help pay for their homes. A new no-annual-fee credit card helps cardholders pay down their mortgage balance by applying the points directly to the mortgage principal.

Cardholders earn one point for every dollar in net retail purchases charged to the card. Each time a GMAC Mortgage Equity Rewards MasterCard holder accumulates 2,500 points, $25 is credited automatically to their GMAC mortgage. There's no annual limit to the number of points you can accrue, and there are no forms to complete or calls to make to redeem points.

Based on a $150,000 mortgage, a 30-year term and a 6.5 percent fixed APR, for example, quarterly payments of $50 will save a cardholder $16,975 and reduce the mortgage term by 17 months.

"The GMAC Mortgage Equity Rewards MasterCard gives consumers a way to leverage the power of their everyday expenses to pay down their mortgages faster," said Rick Gillespie, GMAC Mortgage's chief marketing officer. "Paying even a few hundred dollars extra each year toward mortgage principal can save thousands over the life of a 30-year mortgage."

The card is offered at a 7.9 percent APR and includes an introductory rate of zero percent on cash advance checks and balance transfers until April 2005, credit lines of up to $100,000, 24-hour customer service, fraud protection, secure Internet access to account information, electronic bill-paying service and worldwide acceptance. The service is provided through MBNA, the largest independent credit card lender in the world.

Applications are available to those who call 800-821-8758.

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