A complete guide to Plastiq
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Imagine paying your car loan with a credit card or paying rent on the first of the month but actually delaying that payment until the 15th. This is the promise of Plastiq.com, an innovative credit card processing platform that lets you pay almost any bill with plastic regardless of available payment methods.
Plastiq.com gives you the opportunity to earn points on purchases you haven’t been able to earn on in the past, but it can also help with your cash flow. Of course, there’s a catch. Like most valuable tools, Plastiq isn’t free to use — at least not all the time.
What is Plastiq?
Plastiq is an online payment service that allows you to pay all of your bills using a credit card, even with merchants or service providers that don’t accept cards as a form of payment, helping you earn miles, points and cash back more quickly.
To begin using Plastiq, your first step is entering some of your personal information to create a profile.
Once you provide Plastiq with a verifiable email, you can create an account by entering more information such as your name, phone number and a password. From there, you’ll be able to enter your credit card information and start paying bills.
How does it work?
Plastiq doesn’t send your bill payments via magic or telepathy; instead, it sends your payments through very traditional means: check or automatic transfer. That way, you can earn the points and miles on your credit card while your landlord or service provider still receives payment in their preferred format.
As you begin paying bills through the platform, you may find that some of the companies you work with are already in the system and set up for automatic bank transfers. Other companies, including contractors you hire, may require an address and billing information so payment can be made to them with a paper check.
The recipients of your payments do not need their own Plastiq accounts to get paid, and there are no membership fees to join. Once you’re ready, all you have to do is create an account, get out your credit card, and start paying bills.
Keep in mind, however, that the timeline of your payment depends on whether an automatic bank transfer or paper check is required. Whereas an automatic transfer may be executed in as few as three business days, checks can take eight days or more.
In exchange for its services, Plastiq charges a flat 2.5 percent fee on each bill you pay — or $25 for each $1,000 in bills you funnel through the service. This fee is added to your purchase and charged to the credit card you use to make your payment.
Which credit cards can be used with Plastiq?
Plastiq lets you use some best credit cards options, including rewards and travel credit cards, to pay your bills. This includes Visa, Mastercard, American Express, Discover, JCB and Diners Club, although some restrictions apply. For example, Visa and American Express do not allow Plastiq to process mortgage payments, and American Express is only supported on Plastiq within the following industries: government, utilities, education, residential rent and club fees or membership.
Which bills can I pay with Plastiq?
While restrictions may prohibit you from paying certain bills, such as a mortgage with Visa or American Express, there are still plenty of ways to utilize this service. Some bills you can consider paying with Plastiq include:
- College tuition
- Utility bills
- Payments to contractors
- Medical bills
- Legal services
Businesses can also use Plastiq, just as an individual would. When a business uses Plastiq, it can utilize the service to cover payroll costs, purchase equipment and more while extending cash flow and earning rewards with a business credit card.
Benefits of using Plastiq
Despite its steep 2.5 percent fee, there are several potential benefits that make this service worthwhile, including:
- Earn rewards: Plastiq lets you earn credit card rewards on purchases you may not have been able to pay with credit in the past. Even after the 2.5 percent fee to use the service, you can still end up ahead if you’re using Plastiq to pay bills that bring you closer to earning a sizeable credit card welcome bonus or if your rewards credit card pays out a higher percentage in rewards than the fee. For example, you could choose utilities as one of your 5 percent cash back categories (on up to $2,000 each quarter on the combined two categories you choose) on the U.S. Bank Cash+™ Visa Signature® Card and potentially earn more than enough to make up the fee.
- Improve cash flow: Your rent is due on the first of the month, but you don’t quite have the money. Plastiq lets you pay your bills on time without part with your cash until your credit card bill is due, saving you from taking on extra interest or a risky loan.
- Avoid costly late fees: If you are on the brink of making late payments, Plastiq will let you pay bills on time (and avoid late fees) with a credit card you can pay off over time. Just remember that the debt is still there — it’s just on a credit card now and earning interest.
Drawbacks of Plastiq
Using a third party service to pay your bills can make a lot of sense for cash flow purposes or for anyone who wants to maximize rewards, but there are still plenty of pitfalls to watch out for. Here are the main downsides of using Plastiq:
- Rewards deficit: With most rewards cards, you can earn around 2 percent on regular purchases, meaning paying a 2.5 percent fee to funnel bills through Plastiq is often a losing proposition.
- Pricier payments: If you start paying all your bills through Plastiq for convenience or rewards, you will quickly find you’re paying 2.5 percent more for almost everything in your life. This fee can add up quickly, particularly when you’re using the service to pay rent or a mortgage.
- Credit card interest and debt: The average credit card interest rate is well over 17 percent, making long-term debt on credit a scary — and costly — proposition. You should only use this service when you can pay your credit card bill in full each month.
Reducing Plastiq’s fee
To circumvent its 2.5 percent fee, Plastiq does offer an innovative “refer a friend” feature that allows $1,000 in “fee-free payments” when you refer someone who uses the service to make at least $500 in payments.
If you are able to convince friends and family to use this service using your unique referral code, you may be able to process your monthly bill payments through Plastiq for free.