Mighty Bargain Hunter

A credit card for debt reduction

February 10th, 2008 | by mbhunter |

This week I called up my mortgage broker to get my online account unlocked (I was a dummy and forgot my username/password) and during the restoration process the customer service person offered me a credit card “based on my activity in my account.”  (In other words, I had a pulse.)

Normally I don’t entertain these offers but I signed up for this one.  The hook was a 6% reward on charges for utilities for the first 12 months, likely to be reduced after 12 months, and 1% on everything else.  The reward, though, is posted once a year as a payment on my mortgage balance, so my credit purchases help to reduce my mortgage debt.  I thought that was pretty cool.

Of course it’s not smart to spend money just to get the rewards, and it’s even less smart to carry a balance on these cards.  But since we pay off our balances each month, this opportunity (assuming I’m approved) seems like a way to throw another $100 to $150 or so this year at my mortgage balance for just a few changes of payment information and another automatic deduction and no additional spending.  I’m still going to have phone, cable, and internet service, so I just pay these expenses with the “mortgage credit card” and everything else with my Chase PerfectCard™ because I get the 1% cash back the next month in the form of a credit on my bill.

If the bonus rate on the “mortgage credit card” goes down to 1%, I’ll probably cancel that card, but if it goes down to something more than 1% I’ll probably keep it.  If my mortgage gets sold to another company then I might miss out on the reward.  The extra card could adversely affect my credit rating should I need it.  But I’m hoping that this new card will be an easy way to pay down my mortgage balance a little bit more without doing much differently.