How to Earn Points (or Make Money) When You Pay Your Mortgage, Student Loans, & Car Loans!

We devote thousands of hours of research to help you get Big Travel with Small Money. You support us by signing-up for credit cards through partner links which earn us a commission. Here’s our full Advertising Policy.

How to Earn Points (or Make Money) When You Pay Your Mortgage, Student Loans, & Car Loans!

Million Mile SecretsHow to Earn Points (or Make Money) When You Pay Your Mortgage, Student Loans, & Car Loans!Million Mile Secrets Team

We devote thousands of hours of research to help you get Big Travel with Small Money. You support us by signing-up for credit cards through partner links which earn us a commission. Here’s our full Advertising Policy.

Update:   One or more card offers in this post are no longer available.  Check our Hot Deals for the latest offers. 

TOP LINE

I just earned 427 Ultimate Rewards Points or 0.88 Ultimate Rewards points per $1 spent-  after accounting for all fees – by using Emily’s Chase Ink Bold to buy a $500 Visa gift card from Office Depot (which earned 5X Ultimate Rewards Points) and then using ChargeSmart to pay $484 towards my student loan.

Credit Card Mortgage
Visa Gift Card from Office Supply Store + Wife’s Chase Ink Bold + ChargeSmart = Ultimate Rewards Points for Paying My Student Loans!

Alternatively, I could have used the American Express Blue Cash Preferred credit card to buy a $500 Visa gift card from a grocery store for a net return of 1.9% cash back, if I preferred cash back to miles/points.

ChargeSmart


You can earn miles and points by paying your mortgage, student or car loans with a Visa, MasterCard, or Discover card (you can’t use an American Express card) via ChargeSmart

However, you have to pay a fee which varies based on the amount paid, or a flat fee, or most often a fee which has a fixed AND variable component to it.

Let’s take a look at the fee structure for my student loan payments to American Education Services:

  • $7.24 for a $100 payment or 7.24%
  • $10.68 for a $250 payment or 4.3%
  • $16.4 for a $500 payment or 3.3%
  • $27.85 for a $1,000 payment or 2.79%

Most cards earn around 1 point/mile per $1 spent (usually worth less than 2 cents per point) or at most 2% or sometimes 3% cash back.  This means that you LOSE money when you use ChargeSmart to pay your loans.

For example, if I earned 2% cash back for using a credit card to pay a loan, but paid a 7.24% fee to use a cash back credit card, I’ve lost 5.24% (7.24% fee – 2% cash back).

But, as I’ve written before, it can make sense to use ChargeSmart just to meet the minimum spending for the sign-up bonus on a new credit card.

Chase Ink Cards & American Express Blue Cash Preferred

However, you can earn 5 Ultimate Rewards points per $1 spent, which can be transferred to airlines or hotels, using the Chase Ink Bold or Chase Ink Plus at office supply stores (Office Max, Office Depot, Staples etc.)

The Chase Ink Bold & Chase Ink Plus are business credit cards, but many folks may be eligible for these cards and not know it!

And you can earn 6% cash back by using the American Express Blue Cash Preferred personal credit card for purchases made at grocery stores.

The high earning potential of these cards absorbs the cost of the ChargeSmart fee and the gift card activation fee and earn you miles/points or cash back!

How It Works

Step 1:   Buy non-reloadable Visa or MasterCard gift cards in $500 denominations from an office supply store (Office Max, Office Depot, Staples) using the Chase Ink Bold or the Chase Ink Plus if you want to earn Chase Ultimate Rewards points.

These points can be transferred to airline or hotels (my favorites being Hyatt, United, Southwest, & British Airways).

Or buy non-reloadable Visa or MasterCard gift cards in $500 denominations from a grocery shop with the American Express Blue Cash Preferred credit card if you prefer cash back.

I haven’t been able to find a $1,000 Visa or MasterCard gift card, but that is likely a better choice since you will save money on activation fees and in ChargeSmart fees.

You will pay a $4.95 activation fee for the Visa and $5.95 for the MasterCard (so try to buy Visa gift cards), but you will earn miles/points or get cash back once you factor in the 5 Ultimate Rewards points earned by buying the gift card at an office supply store or the 6% cash back by buying the gift card at a grocery store.

Note that some lenders charge above 5% which make this unprofitable, so you need to do the math for your lender!

ChargeSmart doesn’t accept American Express so do NOT buy American Express gift cards to use with ChargeSmart.

Step 2: Register your zip code online so that you can use the gift card to make an online payment at ChargeSmart

You can’t use the gift card online if you don’t register your zip code, but that process takes less than 1 minute!

Step 3:  Pay your mortgage, car loan, or student loan in multiples of $500 at a time

Tip:  Be sure to include the ChargeSmart fee, so that the total amount charged (loan payment + ChargeSmart fee) is $500 or a few cents less if you can’t get it to exactly $500.

Credit Card Mortgage
$483.97 Towards Student Loan + $ 16.03 in ChargeSmart Fee = $0 on my Visa Gift Card!

If you pay $500, but the ChargeSmart fee is $15, your transaction will be declined because you only have $500 on the gift card, but were trying to pay $515.

Why $500?

Because, most often you will pay a very high fee if you make payments of only $100 or $200 which isn’t worth the points you earn.  But you usually pay a lower fee for payments of $500.

However, the fee for each loan provider is different and YOU need to research the rate charged, and do the math to see if it makes sense to make a payment of less than $500 using a gift card!  I’ll cover individual lenders in more detail in future posts.

And using a $1,000 gift card, in one payment, is even better because you save on the activation fee and usually pay a lower ChargeSmart fee (not always, though, since some loan providers charge a flat fee.

An Example to show how it works!

I can’t show you the math for every possible situation since the fee structure varies by loan provider.

But I can show you the math for my student loan payment earning Ultimate Rewards points and Cash Back.

American Education Service Student Loan PaymentChase Ultimate Rewards Points 

This method takes advantage of the 5X Ultimate Rewards points earned when you buy a gift card using the Chase Ink Bold or Chase Ink Plus at an office supply store (Office Depot, Office Max, Staples).

Cost:

  • ChargeSmart fee of $16.03 for a $483.97 loan payment.  Note how the total of my loan payment and the ChargeSmart fee is exactly $500
  • $4.95 Activation fee for the pre-paid Visa gift card

Total cost = $20.98 ($16.03 ChargeSmart Fee +$4.95 activation fee for Visa gift card.)

Chase Ultimate Rewards Points Earned:

I earn 5X Ultimate Rewards points for my purchase of $504.95 ($500 for the visa gift card + $4.95 for the activation fee).

That’s $505 X 5 Ultimate Rewards points per $1 spent = 2,525 Chase Ultimate Rewards Points.

My Profit:

I’ve paid an extra $20.98 to earn 2,525 Chase Ultimate Rewards points.

Remember that you can redeem 1 Chase Ultimate Rewards point for a 1 cent statement credit, so let’s assume that I redeem 2,098 of my 2,525 Ultimate Rewards points for a 1 cent statement credit to make up my cost of $20.98.

That still leaves me with 427 Ultimate Rewards points (2,525 points earned – 2,098 points redeemed to cover my cost) for my loan payment of  $483.97.

Or an earning rate of 0.88 Ultimate Rewards points per $1 spent (427 Ultimate Rewards points / $ 483.97) on my student loan excluding the ChargeSmart fee and gift card activation fee.

This is much better than the zero points I’d earn otherwise by paying through my bank account!

I can either redeem 427 Ultimate Rewards points for:

  • $4.27 in cash because 1 point = 1 cent statement credit
  • $5.33 towards travel using the Ultimate Rewards portal because 1 point = 1.25 cents towards travel
  • Transfer to airline or hotels

Some folks may even decide that paying $20.98 to earn 2,525 Ultimate Rewards points is a great deal since you’re effectively paying only 0.83 cents per Ultimate Rewards point (2,098 cents / 2,525 Ultimate Rewards point).

American Education Service Student Loan Payment – Cash Back with American Express Blue Cash Preferred

This method takes advantage of the 6% cash back when you buy a gift card using the American Express Blue Cash Preferred at a grocery store.

Cost:

My cost of $20.98 – $16.03 in ChargeSmart fees and $4.95 is still the same.  I buy a $500 gift card card from a grocery store to take advantage of the 6% cash back in grocery stores with the American Express Blue Cash Preferred.

Cash Back Earned:

However, I earn 6% cash back on my purchase of $504.95 ($500 for the visa gift card + $4.95 for the activation fee).

That’s $30.30 in cash back (6% cash back X $504.95 purchase)!

My Profit:

The profit is $30.30 in cash back less the $20.98 which I pay in ChargeSmart fees and gift card activation fee for a profit of $9.32 per $500 gift card!

That’s a return of 1.9%  ($9.32 in cash back / $483.97 in student loan payment)!

Caution

– You won’t be able to pay the exact amount of your loan payment because this method is usually profitable only when using a $500 (or higher denomination) gift card in full to minimize the fees charged by ChargeSmart.

For example, if your monthly mortgage is $750, you can overpay your mortgage by $250 if you use two $500 gift cards.  But be sure that you can pay off your credit card bill in FULL.  Interest on credit cards is much, much higher than on most other loans.

Or you can pay $500 using a gift card, but will have to make a separate payment to pay the outstanding balance of $250 from your bank account.  But don’t forget to do this!

– Using gift cards is most useful for making auto and student loans where the fee rates aren’t that high.  Some mortgage lenders, such as Citi and Wells Fargo charge a high fee (5% for paying $500) which may it unprofitable to use gift cards and ChargeSmart.

– You earn 5X Ultimate Rewards points on only the first $50,000 in spending in Office Supply stores on the Chase Ink Bold or Chase Ink Plus.  This works out to $4,167 in monthly spending in Office Supply stores.

– I’m also not sure if there is a maximum limit to the number of cards you can use with ChargeSmart and if there is a maximum number of payments which you can make in a day.

– ChargeSmart could stop accepting gift cards for loan payments without notice, so don’t stockpile gift cards!

I’ve made 3 payments to my student loan account today and will update once they post to my student loan account.

Bottom Line

 Using the Chase Ink Bold or Chase Ink Plus cards to buy $500 gift cards from office supply stores or the American Express Blue Cash Preferred to buy $500 gift cards from grocery stores is a great way to earn miles/points or cash back for making those loan payments which don’t usually earn miles or points!

This method is also helpful in meeting the $10,000 spending requirement, within 3 months, on the Chase Ink Bold or Chase Ink Plus to get the full 50,000 point bonus.

If you liked this post, why don’t you join the 25,000+ readers who have signed-up to receive free blog posts via email (only 1 email per day!) or in an RSS reader …because then you’ll never miss another update!

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry that something went wrong, repeat again!

44comments

by Newest
by Best by Newest by Oldest

One down side to doing this is that there is a max of 6000 in spending that you can get the 6% cash back on groceries per year. So you’ll burn through your 6000 limit at only 1.9% instead of using it on actual groceries at 6%. Of course, if someone else in your house has the same card, then maybe it makes sense, but then again, you’ll get 114 back at the 1.9 rate, and the card costs 75 per year, so you’ll really only net 39. I think it only makes sense if you for some reason don’t buy groceries or if you have a second blue cash preferred card in your household. Interesting though.

If using a Visa CC to pay a mortgage payment, what does the charge appear to be to the card issuer?

And if using 6 x $250 Visa GCs how would these payments appear to Wells?

Thanks

Hi Darius,

Just wondering if you still advocate the use of ChargeSmart for paying down loans (in my case a lease buyout) to financing companies that don’t accept credit card payments?

Haven’t seen much activity with regards to this service, so I’m curious if it’s still legit and they’re trustworthy enough?

I assume if anything goes awry, I can always claim a chargeback if they didn’t provide the service expected.

Not to mention it will help meet minimum spend requirements on a couple of cards to gain sign up bonuses.

Thanks for all your help!

Actually I just noticed to send $2500 it would cost $67.99 through chargesmart which seems like a lot since I am just trying to get the 40000 miles from chase sapphire preferred.

Hey Darius,

Does the charge smart method to pay a mortgage still work now? Do you know if you can pay part of your mortgage rather than the whole thing?

Load more