Heading into oblivion.. | Tomson Burnham LLC

I like to read Business Week. The latest issue to hit my mailbox, left my jaw dropping.

Just Charge That Mortgage by Jessica Silver-Greenberg caught my eye.

Apparently using homes as ATM’s during the boom time was not good enough.

ChargeSmart,has a new online payment service where homeowners can continue to spend themselves silly. Yep, you can use your credit card to pay your home mortgage. 48 lenders are participating, and these are not small lenders. The big guys are there.

The cost, according to the article, is $4.95 plus 2.29% of the transaction. So if you have a $2,000 mortgage payment, you can have the privilege of paying it with your credit card and increase your payment by $50.75 a month.

That’s $609 more a consumer will pay over the course of a year.

“With the reward points, cash back, and payment flexibility…, educated consumers are looking to charge everything they can,” says ChargeSmart’s Philip Mikal according to the article.

So if I flew once a year from Portland, OR to Portland, ME and went United it would cost me $420 to buy the ticket directly. If I charged a mortgage, I have the privilege of paying out $609 a year in fees in order to get the miles to purchase the ticket for “free.” That’s a $189 loss.

Now, call me crazy but if their target consumer is educated, don’t you think they can calculate this out?

What this tells me is that the target consumer is not the educated consumer. So for homeowners that are struggling, they now have a new way to make their lives worse. Double pay interest. That’s right for the easy convenience you can pay 6.375% on your home loan; then charge it for that nice additional fee; then if you fail to pay it off in time, that will only be an additional 13.4%.

Wow…sounds like a deal. Sign me up!

With many people teetering on the edge due to the housing decline, here is just one more way for them to spend themselves into oblivion.