You can pay your utility bill with a credit card, but you may pay convenience fees. However, it could also help you earn rewards and ensure your bills get paid even when your checking account is empty.
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When life gets busy, you can easily forget to pay a bill or two. But fail to pay your utility bill and you could end up without essential services like electricity or water. To ensure your utility bills are covered every month, you can pay utility bills with a credit card, but there may be a convenience fee and other factors to consider. Here are some pros and cons to understand before paying a utility bill with your credit card.
Paying your utility bills with a credit card can be convenient, help you earn rewards, and ensure your payments go through each month. But it also comes with some risks you’ll want to consider. This complete guide covers everything you need to know about using a credit card for your utility payments.
What Utility Bills Can You Pay With a Credit Card?
Most major utility companies accept credit cards as a payment method The most common utility bills you can pay with a credit card include
- Electricity
- Natural gas
- Water
- Sewer
- Trash pickup
- Cable TV
- Internet
- Home phone
- Cell phone
You may also be able to use a credit card for some additional services like home security monitoring.
However there are exceptions. Some smaller local utility companies or municipalities may only accept checks or bank account payments. And you usually can’t pay rent or mortgage payments with a credit card.
The Pros of Paying Utility Bills With a Credit Card
Using your credit card to pay utility bills offers several potential benefits:
Earn Rewards
If you have a rewards credit card, you can rack up points, miles, or cash back by charging your utility payments. This allows you to get something back for paying your necessary household bills each month. Just make sure the value of rewards outweighs any convenience fees.
Enjoy Purchase Protection
Some credit cards provide purchase protection, extended warranties, or other benefits on items you purchase with the card. This perk could cover damage to a cell phone paid for with that card, for example.
Meet Spending Requirements
When you open a new credit card, there is often a spending requirement to earn the sign-up bonus Charging utilities on the card can help meet the minimum spend to earn that bonus faster
Guarantee Payments
If you set up automatic bill pay from your bank account, a lack of funds on the due date could result in a missed payment, late fees, or service disruption. Paying with a credit card ensures your bill gets paid even if your checking account balance is low.
Simplify Disputes
If you ever need to dispute a charge on your utility bill, it can be easier to get your money back when you paid by credit card versus direct from your bank.
Establish Credit History
Paying recurring bills with a credit card and making on-time payments shows responsible usage and builds your credit over time.
The Cons of Paying Utilities With a Credit Card
However, there are also some downsides to watch out for with paying utility bills using your credit card:
Convenience Fees
Many utility companies charge processing fees ranging from $2-$5 when you use a credit card. These fees can eat into any rewards you earn.
Credit Utilization
Depending on amounts owed, paying utilities on a card with a low limit could drive up your credit utilization ratio and negatively impact your credit score.
Risk of Interest
If you carry a balance month-to-month, interest charges can make utilities paid with a credit card much more expensive than paying directly through your bank.
Remembering Multiple Due Dates
With different credit card and utility due dates to keep track of, it’s easier to accidentally miss or pay a bill late.
Tips for Paying Utility Bills With a Credit Card
If you want to use a credit card for your utility payments, here are some tips to make it work best:
- Ask utility companies about convenience fees so rewards outweigh costs
- Pick a card with high enough limit to avoid credit utilization issues
- Set payment due date reminders to avoid late fees
- Pay statement balance in full each month to avoid interest
- Put a monthly bill on each of multiple cards to maximize rewards
- Use autopay to set and forget the payments
- Check for temporary promotional financing offers on new cards
How Paying Utilities Can Help Your Credit
As you work to build or rebuild your credit history, responsible use of credit cards including consistently paying utility bills on time each month demonstrates you are a reliable borrower.
Utility payments are often some of the most consistent monthly expenses. So even a small recurring bill charged to credit, paid on time, can steadily strengthen your credit profile over time.
When Can You Pay Utilities With a Credit Card?
Many utility providers now offer the option to pay your bills online, by phone, by mail, or in person with a credit card. Some even allow you to set up an automatic monthly payment schedule.
You’ll want to check your individual utility company websites or billing statements to see specifically what options they offer for credit card payments.
If you don’t see credit card listed or have doubts, it never hurts to call their customer service line and ask directly about paying your utility bill with a card.
Is Paying Utilities With a Credit Card Right for You?
At the end of the day, whether or not paying your electric, water, cable, or cell phone bills with a credit card makes sense comes down to your personal financial situation.
If you tend to carry balances and incur interest, the extra costs may not be worth it. But if you can pay off the card each month and earn more in rewards than fees, using a credit card for utilities can be a win.
Look at your own spending habits, credit profile, and the incentives of your cards to decide if you should pay utility bills with credit. Doing so responsibly can provide convenience and benefits, while helping demonstrate you handle credit wisely.
Cons of Paying Utilities With a Credit Card
- There may be a convenience fee. Some utility providers charge a convenience fee for paying your bill with a credit card. While the fee may only be a few dollars, youll pay it every month, which adds up over the year. Often, these convenience fees total more than the credit card rewards you can earn by paying the bill. Before opting to pay with a credit card to earn rewards, carefully weigh the potential rewards against any fees. On the flip side, some utility companies give you a discount if you pay directly from your checking account. Ask if yours does.
- Your credit score could suffer. Depending on your utility charges, how many utilities you pay with the same card and your credit limit, its 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. For example, if you have a credit card with a $1,000 limit and you put $400 worth of utility bills on it every month, youre using 40% of your available credit. To avoid this risk, estimate your monthly utility bills and, if necessary, spread them across multiple credit cards to avoid overloading any one card.
- You could end up paying interest. If you use a credit card to pay your utility bills and dont pay the balance in full when its due, your balance will begin to accrue interest. Credit card interest is generally compounded daily. With current credit card annual percentage rates (APRs) topping 20%, interest can quickly snowball, making it harder to pay off your balance.
What Utilities Can You Pay With a Credit Card?
While payment options may vary depending on your utility provider, you can usually pay the following utility bills with a credit card:
- 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 okay to pay utility bills with a credit card?
Credit cards can usually be used to pay for things like utilities, insurance, phone service, internet, cable, and sometimes rent or mortgage payments. But there may be processing fees if you use a credit card.
What credit card is best for paying utilities?
It has already been said in this thread that the US Bank Cash/Elan Max Cash Preferred card is the best credit card for utilities because it gives you 5% cashback.
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.
Does paying utility bills with a credit card affect your credit score?
Your credit utilization ratio could go too high if you pay your utility bills with a credit card. This depends on how much the bills cost, how many you pay with the same card, and your credit limit. Using more than 30% of your available revolving credit can negatively affect your credit score.
Should you pay utility bills with a credit card?
Credit cards are a good way to pay your bills if there are no extra fees or if the rewards are greater than the fees. You should also try to pay off your balances in full every month. You might get a lot of bonus points on the things you buy anyway! Which credit card is best for paying your bills?
Do all utilities accept credit card payments?
Also, keep in mind that not all of your utilities are with the same company, so you may need to multiply the fees by each one. Some utility companies don’t take credit cards, but you can use a third-party service like Plastiq to pay your bill anyway.
What bills can I pay with a credit card?
In many cases, you can pay for all your monthly bills and utilities using a credit card. If you use a credit card, you may have to pay small service fees, but the rewards you would get are often worth it.
How do I set up automatic payments for my utility bills?
The website or phone number of your utility company should let you set up automatic payments for your bills. Some providers let you pay with a credit card right away, while others, like Plastiq, make you go through a third-party processor.
What happens if I don’t pay my utility bills?
If you use a credit card to pay your bills and don’t pay off the full balance when it’s due, interest will be added to your balance. Credit card interest is generally compounded daily. Annual percentage rates (APRs) on credit cards are now over 20%, which means interest can add up quickly and make it harder to pay off your balance.
