The savvy consumer knows that if you charge every cent and make payments each month, your credit card rewards program can pay off in a big way. Two new programs now integrate mortgages, as well, and each offers significant payoffs.

To take advantage of credit card reward programs, astute cardholders will try to charge everything and anything to build up point totals. However, cardholders have not been able to convert a huge monthly payment-their home mortgages-into points. That's because most lenders have refused to pay the merchant fees to credit card companies for the loan payments.

But when opportunity knocks, it's inevitable that someone will answer-especially when money is involved. Two different financial institutions are looking to take advantage of the opportunity with their new mortgage/rewards programs.

Don't pay for your home without it

The old American Express tagline, "Don't leave home without it," is due for an update, because the credit card giant now allows customers to charge their mortgage payment. The plan includes a one-time fee of $395-but the cost can possibly be recouped in one year. If, for example, you charge $3,000 or more per month, your end-of-year cash reward will exceed the fee.

The program does have some restrictions, however. To get the card, your home mortgage or refinance must be with American Express, and you must have good credit. The financial giant obviously wants no part of the subprime mortgage debacle.

A deal to "Di" for

The other lender to roll out a credit card rewards program involving a mortgage is a company called Ditech, a division of GMAC. Its "Real Life Plan" is a combination of three financial products-a mortgage, a second mortgage, and a credit card.

The loans available in the program are relatively straightforward. The first mortgage is a typical prime mortgage, and the second includes two options-a fixed rate product and a home equity line of credit. There are also two credit card options-Platinum and a Preferred MasterCard-and both allow for no-annual fee, and zero percent interest rate balance transfers.

You do need either a first or second mortgage with Ditech to use the program, but in either case, you can charge your mortgage payment with your credit card.

The program rewards cardholders by helping to pay off mortgage principal. With every 2,500 points that you accrue, $25 will be automatically credited to the principal balance on a mortgage. There's no limit on the points that can be built up, but Ditech offers the program only to people with credit scores higher than 731, an indication that they, too, are extremely cautious of the subprime fallout.

Both of these new opportunities offer a significant development in the world of rewards programs. Opportunity has been knocking to integrate mortgage payments into the credit card rewards mix. American Express and Ditech are the first to answer the call.

Published on September 14, 2007