In a Nutshell Paying your monthly bills with credit cards can reap rewards faster, but are there drawbacks? Depending on the bill, it may make sense to pay it with a credit card. With some bills, however, it doesn’t. Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect
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Paying bills is a necessary part of adult life. But writing checks, managing due dates, and keeping track of payments can be tedious and time-consuming. Many people wonder if they can simplify the process by using a credit card to pay recurring bills.
The short answer is yes you can pay many bills with a credit card. But it’s not as straightforward as just swiping your card – there are fees risks, and other factors to consider. This comprehensive guide will walk you through everything you need to know about paying bills with a credit card.
What Bills Can You Pay With A Credit Card?
The first question to address is what types of bills you can actually pay with a credit card. While most recurring expenses are fair game there are some notable exceptions
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Mortgages – Most mortgage lenders do not accept credit card payments due to the high processing fees. You may be able to use a third-party service for a fee.
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Rent – Paying rent with a credit card involves extra fees and rarely makes financial sense. Some services like Plastiq act as an intermediary for a 2.5% fee.
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Car loans – Auto lenders generally don’t allow credit card payments. You’d have to refinance a car loan to credit card debt at a likely higher interest rate
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Student loans – Federal and private student loans cannot be paid directly with a credit card in most cases.
Some bills you can easily pay with a credit card include:
- Utilities like electricity, gas, water, cable, internet
- Mobile phone service
- Insurance premiums
- TV/streaming subscriptions
- Gym memberships
- Medical bills and co-pays
Many service providers accept credit cards online, over the phone, or through autopay. Just be aware of any convenience fees they may charge.
Benefits of Paying Bills With a Credit Card
Assuming you avoid interest by paying your balance off in full each month, here are some potential benefits of charging your recurring bills:
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Earn rewards – Credit cards offer lucrative programs like cash back, points, miles that add up quickly when you use them for necessities.
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Simplify payments – Consolidating bills onto one card streamlines tracking due dates and payments.
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Improve cash flow – You gain a grace period before your payment is due with a credit card.
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Build credit – Responsible credit card use demonstrates you can manage revolving credit and helps build your credit score over time.
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Fraud protection – Credit cards provide $0 liability guarantees against unauthorized charges.
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Purchase protection – Many cards include protections for items charged in case they’re damaged, stolen, or lost.
Risks of Using a Credit Card for Bills
Paying recurring bills with a credit card also comes with some potential drawbacks to be aware of:
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Interest charges – If you carry a balance, credit card interest rates are much higher than most alternatives. This risk outweighs any rewards or benefits.
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Late fees – Missing your credit card due date can result in late fees from the card issuer and your service provider.
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Convenience fees – Some billers charge an extra processing fee for credit card payments that can negate rewards earned.
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Credit utilization – High balances can negatively impact your credit score even if paid off each month.
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Overspending – Swiping a card makes it easier to overpay for services since it feels less like “real” money.
Strategies for Using a Credit Card Responsibly
The key to successfully leveraging your credit card for bills is using it responsibly. Here are some best practices to follow:
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Only charge what you can pay in full each month. Carrying a balance leads to costly credit card interest.
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Pick one primary card for bills to simplify tracking. Using multiple cards requires juggling dates and payments.
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Set payment reminders a few days before your due date as a failsafe against missed payments and late fees.
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Check statements closely each month to ensure there are no fraudulent or inaccurate charges.
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Pay down balances quickly during 0% intro APR periods to avoid deferred interest.
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Try to keep your credit utilization below 30% of your total available credit limit.
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Build an emergency fund to cover bills in case of job loss or other financial disruption.
Alternatives to Paying Bills With a Credit Card
If you’re uncomfortable using a credit card for recurring expenses, there are alternatives to consider:
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Enroll in autopay through your bank account using ACH transfers or debit card payments.
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Use money from an emergency fund to manually pay bills each month.
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Set up automatic withdrawals from an account with bill pay services like doxo or Prism.
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Leverage a checking account’s online bill pay to schedule one-time or recurring payments.
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Consider a personal loan for debt consolidation at lower interest rates (typically 6-36% vs 12-30% for credit cards).
The Bottom Line
Paying monthly bills with a credit card can be rewarding when done responsibly. But it equally can be risky if you tend to carry balances. Take a close look at your financial situation and spending habits before deciding if it makes sense. If you move forward, be vigilant about paying your balance off fully each month and not overspending.
While bill pay automation with a credit card may seem appealing, you have alternatives from using your checking account to taking out a consolidation loan. Consider both the pros and cons as well as your unique circumstances to determine the most prudent way to cover your recurring expenses.
Looking for new ways to accumulate credit card points and rewards?
Paying your monthly bills seems like a great way to earn more rewards. But is it wise to pay your bills with credit cards?.
There are different kinds of bills, so you’ll have to look at each one to see which ones you can pay with a credit card. But first, here’s a quick look at the pros and cons of paying bills with plastic.
- Accrue rewards or points
- Automatic payments that save time and help prevent late fees
- Convenience of no check writing
- Easier expense tracking with everything on one statement
- Can mean additional time to pay
- Can help meet credit card sign-up bonus requirement
- Possible fees
- Increased debt
- Additional interest if balance is not paid in full
- Credit utilization could go up, which could affect credit scores
In general, paying your monthly bills with a credit card can be a good idea as long as you follow these two rules:
- Every month, you should pay off your whole bill on time.
- If you can’t pay your bills with cash, don’t put them on a credit card.
If you’re having trouble paying your bills, a credit card could buy you a little time. But using your credit card to pay bills you can’t afford all the time could make your situation worse and cost you a lot in interest. But if you’re just paying regular bills that you can afford, using a credit card can be helpful.
Which bills can you pay with a credit card, and which ones will charge you extra if you do? Let’s look at the best types of bills to pay with a credit card.
Mortgages are the biggest monthly cost for most people, so getting that credit card sign-up bonus or a lot of points seems like a simple way to save money.
Sadly, virtually no mortgage servicers will allow credit card payments. Why do they do this? Because lenders don’t want to pay the credit card fees that come with taking payments.
If you’re lucky enough to find a mortgage servicer that will let you use a credit card to pay your mortgage, be ready to pay a fee that is likely to be higher than the benefits you want.
If you don’t mind a fee, third-party services such as Plastiq might be a good option for you. For a standard 2. 9% fee, the business charges your credit card and sends a check to your mortgage lender (or anyone else you may want to pay). Before using this type of service, you’ll have to calculate if the fee is worth the rewards.
If you rent instead of buying a home, it may still be tough to find a landlord who will take a form of payment other than cash or a check for your monthly rent.
If you rent from a company with better bookkeeping, you might want to pay your rent with a credit card, especially if there is no fee for the ease of doing so.
People who rent out their homes only take cash or checks could still use a service like Plastiq or look for a credit card that has a rent payment portal. There are costs to all of these options, such as interest, fees, or convenience charges. But it’s up to you to decide if the pros are greater than the cons.
Auto lenders, like mortgage lenders, aren’t likely to accept credit card payments. They, too, want to avoid the processing fees.
You can pay off your car loan with a credit card, but you have to be very careful with your money. You might be able to move your car loan to a credit card if you find one with a 0% introductory APR for balance transfers. But before you jump on this idea, there are caveats.
This choice is only sensible if you pick a card with a 0% introductory APR on balance transfers. Also, you’ll need to pay off the balance before the rate goes up after the introductory period. Otherwise, you’ll have to pay interest on the credit card debt that you still owe, and the interest rate on the credit card will probably be higher than the interest rate on the auto loan.
There are other downsides. For example, you may not be able to transfer the entire car loan to a balance transfer card. And depending on the card, you may be charged a balance transfer fee. Also, transferring a big balance will probably hurt your credit score because it will make you use more of your available credit.
Given all the caveats, paying your car payment with a credit card isn’t generally the most practical option. You’ll have to consider the downsides and determine if it makes sense in your case.
Debit Card vs Credit Card – What should I use on paying Bills, Online/Store shopping, ETC…
FAQ
Can I pay someone’s bill with my credit card?
Finally, it is possible to use your credit card to pay someone else’s bill, but it’s not an easy process.
Can I use my credit card to pay off bills?
A balance transfer or cash advance might be the only ways you can use a credit card to pay your bill. However, these options may come with fees that add to your debt, such as other things to think about.
How can I pay an invoice with a credit card?
Using a credit card to clear an invoice is a simple and straightforward process. To make the payment, you can log in to the credit card company’s website and enter the payee’s information. These include card number, pin code, expiration date, and one time pin code in some cases.
Is it possible to pay credit card bill from credit card?
Unfortunately, no. With most credit card companies, you can’t use another credit card from the same bank to pay off your bills. This option is usually available only across different banks.
Should you put Bills on a credit card?
Avoid putting bills on a credit card because you can’t afford to pay them with cash. If you’re having trouble paying your bills, a credit card could buy you a little time. But using your credit card to pay bills you can’t afford all the time could make your situation worse and cost you a lot in interest.
Should I use my checking account to pay bills?
Also, if your provider charges a fee for paying by credit card, you should use your checking account to pay your bills. This is because most of the time, credit card fees are higher than the rewards and perks you get from using one.
Are credit cards good for paying bills?
Credit cards make shopping easier, and they can also make paying your bills on time a breeze. Somehow or another, you have to pay your bills, so why not let them help you build credit and earn cashback rewards? Of course, there are some risks that come with using your credit cards for paying bills.
How do I pay bills with my credit card?
Depending on the bill and the situation, there are various ways to use a credit card to pay it. You’ll use a payment terminal to swipe, insert, or tap your card when you pay your bill in person. If you’re paying over the phone, you’ll give your card details to a customer service representative.
Can you pay bills with a credit card?
It is possible to pay bills with a credit card. Using a credit card in this way can help you earn rewards like cash back and travel points. But it’s not always the right financial move. How to use a credit card to pay bills and what bills you can pay with one are talked about below.
Should I pay my monthly bills by credit card?
In general, paying your monthly bills with a credit card can be a good idea as long as you follow these two rules: Always pay your statement balance in full and on time each month. Avoid putting bills on a credit card because you can’t afford to pay them with cash.
