You can pay your utility bill with a credit card, but you may pay convenience fees. It could help you earn rewards, though, and make sure your bills are paid even if your bank account is empty.
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When life gets busy, you can easily forget to pay a bill or two. What if you don’t pay your utility bill? You might lose important services like water and electricity. You can pay your utility bills with a credit card to make sure they are paid every month, but there may be a convenience fee and other things to think about. Here are some pros and cons to understand before paying a utility bill with your credit card.
Paying your monthly bills with a credit card can be an easy way to rack up rewards points and cashback. However, when it comes to paying your electric bill with a credit card, there are a few factors to consider. In this article, we’ll break down the pros and cons of putting your electric bill on a credit card and provide tips for maximizing rewards.
The Pros of Paying Electric Bills with a Credit Card
Here are some potential benefits of charging your electric bill to a credit card:
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Get rewards: A lot of credit cards give you cashback or travel rewards on everything you buy. Depending on the card, you can get 1% to 5% back when you charge your electric bill. This can add up over time, especially since electric bills are one of the bigger monthly costs for most families.
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Convenience Setting up autopay on your credit card ensures your electric bill gets paid on time each month You don’t have to worry about mailing checks or checking your bank account balance,
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Build credit: Making on-time payments on a credit card helps build your credit score. Putting everyday bills like electric on your card and paying in full each month demonstrates responsible credit usage.
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Purchase protection Some credit cards provide protection for items paid for with the card against damage or theft This could cover appliances or electronics that are part of your electric bill.
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Welcome bonuses Opening a new credit card with a welcome bonus offer can score you extra points or cash if you spend a certain amount in the first few months Paying bills helps meet the spending requirement,
Potential Downsides of Paying Electric Bills with a Credit Card
However, there are also some drawbacks to keep in mind:
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Service fees: Many electric companies charge transaction fees for credit card payments, which are usually between 2% and 5%. These fees can eat into any rewards you earn.
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Credit utilization: Putting big, recurring bills on a credit card can make your credit utilization ratio go up a lot. If it gets too high, this can hurt your credit score.
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Interest charges: If you carry a balance on your credit card, interest charges can quickly cancel out any rewards earned. Always pay your bill in full.
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Overspending: Since it’s so easy to swipe a card, some people might charge more than they can afford to pay back.
Tips for Maximizing Rewards on Electric Bills
If you want to use a credit card to pay your electric bill and avoid drawbacks, keep these tips in mind:
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Review electric company policies to see if fees apply for credit card payments and factor those into your cost/benefit analysis.
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Compare rewards credit cards to choose one that gives the highest rate of return on utility payments.
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Consider spreading electric payments across multiple cards instead of just one to keep utilization low on each card.
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Set payment reminders and automate payments to avoid interest charges.
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Pick a card with no annual fee to avoid cutting into your rewards.
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Monitor your credit regularly to detect any impacts from increased card usage.
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Pay your bill early in the credit card billing cycle so the charge has time to process and clear.
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Use your card’s mobile app to track purchases and make sure you have enough available credit for utility bills.
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Take advantage of any one-time bonuses but have a plan to pay off large bills over a few months if needed.
When Paying Electric Bill with a Credit Card Works Best
Paying your electric bill with a credit card can be a smart strategy when:
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Your electric company does not charge processing fees for card payments
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You have a card that offers bonus rewards for utility spending specifically
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You routinely pay your bill in full and avoid interest charges
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You have a large monthly electric bill so rewards add up quickly
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You want extra purchase protection for any electrical equipment
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You need to meet minimum spend for a new card welcome bonus
Other Payment Options
If paying your electric bill with a credit card doesn’t make sense for you, consider these alternatives:
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Enroll in autopay through your bank account to have payments automatically deducted each month
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Use a debit card or charge card that lets you earn rewards without risk of overspending
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Pay ahead to get a discount from your electric company when there are no card processing fees
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Use a mobile payment service like Apple Pay or Google Pay to earn transaction rewards
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Sign up for rewards programs directly through your utility company if available
The Bottom Line
Ultimately, paying your electric bill with a credit card can be rewarding if done responsibly. Check for fees, monitor your credit impact, pay on time, and choose the right card for your spending habits. While credit cards offer convenience and perks, make sure the benefits outweigh the risks before plugging your electric payments into that rewards card.
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What Utilities Can You Pay With a Credit Card?
Your utility company may offer different ways to pay, but in general, you can use a credit card to pay the following bills:
- Phone or cellphone bill
- Internet bill
- Cable bill
- Water bill
- Electric bill
- Gas bill
Debit Card vs Credit Card – What should I use on paying Bills, Online/Store shopping, ETC…
FAQ
Is it OK to pay utility bills with credit card?
Services, utilities, and taxes can often be paid with a credit card but with a processing fee. Loan payments are usually check or bank withdrawal payments only.
Can I pay an electric bill using a credit card?
Pay using credit, debit or prepaid cards powered by Mastercard, Visa, or JCB. Pay in advance or settle overdue bills direct to Meralco. Pay for disconnected service.
What bills Cannot be paid with a credit card?
What kinds of bills can’t be paid with a credit card? Usually, you can’t use a credit card to pay your mortgage, rent, auto loans, student loans, or other loans. While there may be services such Plastiq that allow you to do so, the cost of using these services might exceed the total credit card rewards you earn.
Which is the best credit card for utility bill payment?
The best credit cards to pay for utilities are:
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– Get 3 reward points for every ₹125 spent on dining out and utilities HDFC BankIndianOil HDFC Bank Credit CardEarn 5% of spends as FP on shopping for groceries, utilities & bill payment.
Can you pay utility bills with a credit card?
When life gets busy, you can easily forget to pay a bill or two. What if you don’t pay your utility bill? You might lose important services like water and electricity. You can pay your utility bills with a credit card to make sure they are paid every month, but there may be a convenience fee and other things to think about.
Should I use my credit card to pay my bills?
You can also earn reward points in the process, if your credit card offers that benefit. Here are some pros and cons of using your credit card to set up automatic payments on monthly bills: Paying bills and utilities on a credit card helps you
How much does it cost to pay your electric bill?
According to the National Association of State Utility Consumer Advocates, those fees can range from $1.50 to $5.85 per transaction. If your electric company charged you $5.85 per transaction to pay your monthly bill with a credit card, you’d pay $70.20 per year just in fees.
Should I use my checking account to pay bills?
You should also use your checking account to pay bills in the following situations: Your provider charges a fee for paying by credit card. In most cases, you’ll pay more in credit card convenience fees than you’ll gain in card rewards and perks for using a credit card.
Do credit card rewards Pay for utility bills?
Card rewards outweigh extra fees: Your credit card rewards points or cash back can add up if you use your card to pay for utilities. If you had $4,000 per year in utility bills and used a card that offered 1.5% cash back on every purchase, you’d get $60 in cash back annually. But watch out for card fees.
Does paying utility bills with a credit card affect your credit score?
Depending on your utility charges, how many utilities you pay with the same card and your credit limit, it’s possible that paying utility bills with a credit card could push your credit utilization ratio too high. Using more than 30% of your available revolving credit can negatively affect your credit score.
