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

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

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

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 [Disclaimer:  Information in the table below was accurate as of Saturday, September 15, 2012.  Please double check the exact rate for your lender to make sure it is accurate.]

Last week I wrote about how to earn Chase Ultimate Rewards points or cash back by using either a Chase Ink Bold / Ink Plus or the American Express Blue Cash Preferred to buy gift cards to pay your loan.

I’ve created a table below with the ChargeSmart fee for paying $100, $250, & $500 towards your car loan.

Paying $100 or $250 towards your loans is almost always going to be unprofitable because of the high fee which ChargeSmart charges.

But paying $500 towards your car loan using a Visa or MasterCard could get you Ultimate Rewards points or cash back even after taking into account the ChargeSmart fee.  But do the math to see if this makes sense for you!

Paying Your Car Loan Off

It also appears that most lenders charge a flat fee for a loan payment, so it could very well be profitable to pay your car loan off (or make a large payment) via ChargeSmart using a credit card without having to buy gift cards in $500 increments.

For example, you pay a flat fee of only $9.95 to pay off any amount to America Honda Finance corporation.  So you could use any credit card to pay off, say, a $5,000 loan balance for only a $9.95 fee!

So you’d earn 5,000 Ultimate Rewards points for making a $5,000 payment with your Chase Sapphire Preferred card for only a $9.95 fee.

5,000 Ultimate Rewards points are worth, at least, $50 in statement credit or more if you redeem for travel.

Edit:  Readers have pointed out that ChargeSmart levies a sneaky “Large Payment Fee” in Step 4 of the payment screen for many lenders who charge a flat fee.  So do the math for yourself before making a large payment.

How to See if Paying $500 via ChargeSmart Makes Sense


For example, suppose you want to pay $500 towards your car loan with American Honda Finance Corp. 

Step 1 – Find Lender

Scroll down to the chart below and look for American Honda Finance Corp under “Lender

Step 2 – Find $500 payment fee

Go to the last column “ChargeSmart Fee as a percent of $500 payment“  The ChargeSmart fee is 2.0% for a payment of $500

Step 3 – Find the Total Cost

Add 1% (the activation cost of the Visa/MasterCard) to the fee to get an approximate total cost of paying your car loan with a Visa or MasterCard gift card bought with either the Ink Bold/Ink Plus at an office supply store or with the American Express Blue Cash Preferred at a grocery store.

In this example, the approximate total cost is 3.0% ( 2.0% for paying via ChargeSmart + 1% gift card activation fee.)

Step 4 – Is Total Cost More Than Points or Cash Back Earned?

The last step is to see if this makes sense for your situation.

Chase Ink Bold or Chase Ink Plus:  You earn 5x Ultimate Rewards points or 5% cash back for buying the Visa or MasterCard in an office supply store with the Chase Ink Bold or Ink Plus.

To make things simple & to be conservative in valuation, let’s say you value 1 Ultimate Reward at 1 cent per point.

You’re paying ~3.0% in fees, so your net gain is ~2.0% (5% in cash back/value of 1 Ultimate Reward Point – 3.0% in fees).

The net result is that you’re earning 2.0 Ultimate Rewards points per $1 spent when you pay your car loan in $500 increments via ChargeSmart.

This may or may not be worth it to you once you factor in the value of your time, but this took less time than I thought it would.

American Express Blue Cash Preferred:  You earn 6% cash back for buying the Visa or MasterCard gift card at a grocery store with the American Express Blue Cash Preferred.

You’re paying ~3.0% in fees, so your net gain is ~3.0% (6% in cash back – 3.0% in fees).

You’re effectively earning 3.0 cents cash back per $1 spent when you buy Visa or MasterCard gift cards at a grocery store with the American Express Blue Cash Preferred and pay your car loan in $500 increments via ChargeSmart.

Again, this may or may not be worth it to you once you factor in the value of your time.

Caution

Million Mile Secrets reader Brant wrote in that some banks will apply only your 1st payment towards the monthly payment and ALL other subsequent payments go towards reducing the principal balance.

This could mean that your lender will ding you for not making the full monthly payment so be very careful when you break up your monthly car loan payment into more than 2 payments.

For my student loans it is the opposite, multiple payments all go towards future monthly bills and do not reduce the principal unless I click that option online.

Also make sure that you can pay your credit card bill in FULL.  Credit card interest is much, much higher than interest on loans and you just won’t get ahead by paying interest on credit cards.

LenderChargeSmart Fee for $100 Car Loan PaymentChargeSmart Fee for $250 Car Loan PaymentChargeSmart Fee for $500 Car Loan PaymentFlat FeeChargeSmart Fee as a Percent (%) of $500 Car Loan Payment
Ally Financial, formerly GMAC LLC
$9.95
$9.95
$9.95
Yes, $9.952.0%
AmeriCredit Corporation
$7.24
$10.68
$16.4
No3.3%
American Honda Finance Corp
$9.95
$9.95
$9.95
Yes, $9.952.0%
BMW Financial Services
$12.95
$12.95
$12.95
Yes, $12.952.6%
Bank of America - #59
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - #630
$7.24
$10.68
$16.4
No3.3%
Bank of America - #65
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - #6824
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - CT
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - FL
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - MA
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - ME
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - NH
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - NJ
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - NY
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - PA
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - RI
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - Line of Credit
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - Loan Products
$14.95
$14.95
$14.95
Yes, $14.953.0%
Budco Nissan
$ 7.24
$10.68
$16.4
Yes, $14.953.3%
Capital One Auto Finance
$9.95
$9.95
$9.95
Yes, $9.952.0%
CarMax Auto Financing
$7.24
$10.68
$16.4
No3.3%
Chase Auto Lease$7.24
$10.68
$16.4
No3.3%
Chase Auto Loans
$9.95
$9.95
$9.95
Yes, $9.952.0%
Chrysler Financial Corp
$9.95
$9.95
$9.95
Yes, $9.952.0%
Citifinancial Auto
$9.95
$9.95
$9.95
Yes, $9.952.0%
Ford Credit Co
$9.95
$9.95
$9.95
Yes, $9.952.0%
Ford Motor Credit Car Loans & Leases
$7.24
$10.68
$16.4
No3.3%
GMAC LLC - now Ally Financial
$7.24
$10.68
$16.4
No3.3%
Harley-Davidson Credit
$9.95
$9.95
$9.95
Yes, $9.952.0%
Hyundai Motor Finance Lease
$7.24
$10.68
$16.4
No3.3%
Hyundai Motor Finance Retail
$7.24
$10.68
$16.4
No3.3%
Infiniti Financial Services/Lease
$11.95
$11.95
$11.95
Yes, $11.952.4%
Infiniti Financial Services/Loan
$11.95
$11.95
$11.95
Yes, $11.952.4%
Kubota Credit Corporation USA
$8.95
$8.95
$8.95
Yes, $8.951.8%
Lexus Financial Services
$7.24
$10.68
$16.4
No3.3%
Mercedez Benz
$12.95
$12.95
$12.95
Yes, $12.952.6%
Mitsubishi HSBC RS
$4.95
$4.95
$4.95
Yes, $4.951.0%
Mitsubishi HVAC HSBC RS
$7.24
$10.68
$16.4
No3.3%
Mitsubishi Motors Lease
$7.24
$10.68
$16.4
No3.3%
Nissan Motor Acceptance Corp/Lease
$9.95
$9.95
$9.95
Yes, $9.952.0%
Nissan Motor Acceptance Corp/Loan
$9.95
$9.95
$9.95
Yes, $9.952.0%
Primus Automotive Financial Services Inc.
$7.24
$10.68
$16.4
No3.3%
Santander (formerly Drive Financial)
$9.95
$9.95
$9.95
Yes, $9.952.0%
Santander Consumer USA
$9.95
$9.95
$9.95
Yes, $9.952.0%
Southeast Toyota Finance - Lease
$9.95
$9.95
$9.95
Yes, $9.952.0%
Southeast Toyota Finance - Retail
$9.95
$9.95
$9.95
Yes, $9.952.0%
Springleaf Financial
$7.24
$10.68
$16.4
Yes, $9.953.3%
Toyota Financial Services$9.95
$9.95


$9.95
Yes, $9.952.0%
Toyota Motor Credit Load/Retail$9.95
$9.95
$9.95
Yes, $9.952.0%
Volkswagen Credit
$9.95
$9.95
$9.95
Yes, $9.952.0%
Volvo Car Finance North America
$7.24
$10.68
$16.4
No3.3%
WFS Financial
$9.95
$9.95
$9.95
Yes, $9.952.0%
Wachovia Dealer Services (Wells Fargo Dealer Services)
$9.95
$9.95
$9.95
Yes, $9.952.0%
Wells Fargo
$9.95
$9.95
$9.95
Yes, $9.952.0%

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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! :)

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22comments

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Hello,

how or from where do you get the “lending institution account number”?

Author
Million Mile Secrets

@Gabriel C – That is your loan account number on your loan statement/bill.

Thanks for the info about the pre-paid AMEX cards. Do you happen to know if we can use the Net Spend or Mio cards with Charge Smart?

Author
Million Mile Secrets

@CP – No personal experience, but I don’t see why not. But, you risk being shut down by Net Spend for funneling large amounts through the card.

Daraius – as always a very well thought out and researched piece of work. However I do think the risks – which you clearly point out – are generally too high for the average consumer who does not “have time” to spend thinking about this. I’d also add that in general it is very hard to beat PenFed rates so unless you are leasing or have some “special” from the manufacturer (which almost inevitably means you overpaid for the car anyway) then you are missing the real point which is paying too much interest. Same is pretty much true on the mortgage front too

Author
Million Mile Secrets

@Phil – Sure, this isn’t meant for the time-strapped “average consumer,” but the folks who want to maximise their miles and points! This post is more for folks who already have a loan through one of the lenders and want to earn miles and points from their regular payments.

Thanks for all the info. The large payment fee makes it not worth to pay by credit card.

@Lively, I thought Chargesmart will take care paying to mortgage company if chargesmart accepts the payment from our credit card. Do we have to get agree from the actual mortgage company to accept credit card before using chargesmart to pay?

Author
Million Mile Secrets

@Lively @Karen – Most mortgage companies don’t accept credit cards directly, but you can pay via ChargeSmart and don’t have to get your mortgage companies agreement beforehand.

@Cathy Lovell @Karen – The large payment fee is sneaky which is why paying in $500 increments using the gift cards from either office supply stores with the Ink Bold/Ink Plus or from grocery stores with the 6% cash back from the AMEX Blue Cash Preferred is the best way to earn miles and points. The large payment fee varies by lender and amount, so it could be worth it for some.

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