Paying bills is an unavoidable part of adult life. As tedious as it may seem, staying on top of bills is crucial for maintaining good credit and avoiding late fees. But paying bills doesn’t have to be a total drag. By paying bills with a credit card, you can simplify bill pay, rack up rewards, and even boost your credit score.
What Bills Can You Pay With A Credit Card?
You may be surprised by the variety of bills you can pay with a credit card. Here are some of the most common bills you can charge to a credit card:
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Utilities – This includes electric, gas, water, cable, internet, etc. Some utility companies charge a small processing fee for credit card payments.
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Insurance: You can pay your auto, health, home, renters, and life insurance premiums with a credit card at most insurance companies.
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Cell Phone/Mobile Phone – Major wireless carriers like Verizon, AT&T, T-Mobile, and Sprint all accept credit cards
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Rent: More landlords are taking credit card payments through RentPayment and RadPad, which are third-party services that charge a fee to process the payment.
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Mortgage – You can pay your mortgage with a credit card through third party processors like Plastiq or PayMyMortgage for a fee.
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Fees for the government: The IRS, DMV, and other government offices accept credit cards, but they charge fees to process them.
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Medical Bills: Most doctors and hospitals will take credit cards for no extra charge. Some may charge a fee of 2-3%.
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Auto Loans – While you can’t pay your actual auto loan with a credit card, you can make your monthly payments. Lenders like Chase accept credit cards but charge a fee.
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Property Taxes – Services like Official Payments and Paymentus allow you to pay property taxes by credit card for a small fee.
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Federal Income Taxes – The IRS allows you to pay federal income taxes with a credit card through approved third party services for a processing fee.
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Childcare Expenses – Most childcare centers, camps, lessons, nannies, and babysitters accept credit cards with no processing fee.
So as you can see, there are plenty of common monthly and occasional bills you can charge to a credit card. Just be aware that some lenders and billers charge processing fees ranging from 2-5% for the convenience of paying by card.
Should You Pay Bills With a Credit Card?
Paying bills with a credit card offers several potential benefits:
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Earn rewards – By paying bills with a rewards credit card, you can earn cashback, points, miles, or other perks on purchases you’d be making anyway. This allows you to offset some of the cost.
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Convenience – Making one payment on your credit card bill is easier than tracking multiple bills. You can set up autopay as well.
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Build credit – Responsibly using a credit card to pay bills and then paying your statement balance in full each month helps build your credit history.
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Purchase protection – Paying bills with a credit card provides stronger fraud protection and may allow you to dispute charges more easily.
However, there are some downsides to watch out for when paying bills with a credit card:
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Interest charges – If you carry a balance and don’t pay off your credit card bill in full, interest charges can outweigh any rewards earned.
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Processing fees – As mentioned, some billers charge fees for the convenience of using a card which cuts into rewards earned.
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Credit utilization – Maxing out cards to pay bills can negatively impact your credit utilization ratio and scores.
Tips for Paying Bills With a Credit Card Responsibly
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Only pay bills with a card if you will pay off the balance in full each month to avoid interest charges. Don’t overextend your credit.
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Check for processing fees charged by the biller and consider them when weighing rewards earned.
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Consider using a separate credit card just for paying bills to simplify tracking spending. Make payments automatically each month.
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Pay down balances quickly and aim to keep credit utilization below 30% on each card.
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Set payment reminders and check statements regularly to ensure on-time payments and avoid late fees.
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Notify card issuer if traveling or making large transactions to avoid potential fraud holds.
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Review rewards programs to pick the best card for categories where you spend the most on bills. Cashback cards are simplest.
The Bottom Line
Paying bills with credit cards can be a smart financial move with proper precautions. The convenience and potential rewards make it enticing while the risk of interest and fees require caution. Assess your financial situation honestly to determine if paying bills with a card aligns with your goals and will be manageable for you. Implement some of the tips above to use credit cards responsibly.
Frequently Asked Questions
What credit card is best for paying bills?
The best credit card for paying bills depends on your spending categories and needs. Flat-rate cashback cards like the Citi Double Cash which offers 2% back on everything are a solid pick. The Chase Freedom Flex or Discover It Cashback match provide 5% back on rotating categories. If you spend heavily on groceries or transit, consider cards with bonus rewards in those categories.
What bills should you not pay with a credit card?
Avoid paying major loans like auto, mortgage, and student loans with a credit card as you’ll incur costly processing fees that outweigh rewards. Also be cautious of bills with late fees like rent where a rewards delay could cause issues. Payday loans and taxes also aren’t ideal to pay with cards.
Is it smart to pay all bills with a credit card?
It’s generally smart to pay recurring monthly bills like utilities, phones, cable, insurance, streaming services, etc with a rewards credit card if you pay the statement balance off in full each month. This allows you to earn rewards on essential expenses you have to pay anyway. Avoid paying large irregular bills on credit just to earn rewards.
What happens if you pay your credit card bill late?
Paying your credit card bill late results in late fee penalties, usually around $30-40. More importantly, it will show up as a late payment on your credit report and can significantly hurt your credit scores. Set up autopay on your credit card account to avoid late payments.
Can you overpay a credit card bill?
Yes, you can safely overpay your credit card bill with no negative consequences. The credit card company will hold the overpayment balance as a credit on your account to cover future charges. You won’t lose the money or be penalized for overpaying. It serves as a buffer for future bills.
Key points about: paying bills with a credit card
- Electricity, phone, and medical bills are some of the bills that can be paid with a credit card.
- If you can’t pay your bills with a credit card, you might be able to get a cash advance or balance transfer.
- If you use a credit card to pay a bill and don’t pay the full amount by the due date, you may have to pay interest.
These days, there are companies that allow you to pay bills with a credit card. Charging your bills may help streamline your bill-pay process, and you might even earn rewards for your spending. But you’ll need to pay off your credit card balance in full each month to avoid paying interest. Here are some things to consider about using your credit card to pay bills.
Other ways to pay bills with your credit card
There are bills you cant typically pay with a credit card, like mortgage, student loan, and auto loan payments. But there are ways to utilize your credit card to pay these and other expenses.
Some credit cards allow you to take a cash advance, where you borrow cash against your credit limit. You may be limited in how much money you can borrow, and you may have to pay interest (often at a rate higher than the interest rate on your buy) and fees. Also, interest rates usually start the day you take the money out of your credit card account. This makes borrowing money with a credit card a pricey way to pay your bills. It may be best to save a cash advance for emergencies and not use it for a monthly bill.
A balance transfer to a credit card with a lower interest rate is another way to pay off some loans with high interest rates. Most balance transfers charge a fee (usually a percentage of the amount you’re transferring). But you may be able to save on interest with a low intro APR balance transfer. Some credit card companies offer new cardmembers low introductory rates.
