Should you pay bills with a credit card?

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Paying your bills with a credit card can be a simple way to boost your rewards earnings or streamline your budget by keeping bill payments and everyday purchases in one place. Many cards offer rewards categories that cover everything from cell phone providers to subscription streaming services, and many even offer protections or insurance on your purchases.

However, making a habit of financing monthly bill payments you can’t afford using a credit card could be dangerous and lead to long-term debt balances. Before you begin paying your bills with your card, it’s important to have a clear plan for what cards you will use, what bills you will pay and how you will pay off your credit card balance.

Is it possible to pay bills with a credit card?

For many bills that you regularly pay, using a credit card is very easy. Often, utility companies, cell phone providers and subscription services, among others, accept credit card payments and may even have online portals or dedicated phone lines for your payments. Even your taxes may be paid with a credit card.

Other bills may be more complicated. Many mortgage and auto loan lenders, for example, don’t accept credit card payments because of the processing fees involved. There are third party payment services you can use to make those payments with your credit card, but you’ll take on charges and fees for doing so.

How to pay with your credit card

The most important thing to remember when paying bills with your credit card is that you should pay your balances off in full each month. Don’t risk running up high-interest debt on your card by charging monthly bill payments you can’t afford. Check your statement regularly and do your best to pay off the entire balance each billing period. Otherwise, any rewards you earn will be quickly wiped out in interest payments.

Use your servicer’s options

The easiest way to pay a bill with your credit card is through your service provider or lender’s online platform, when available. You may even have the option to set up autopay for your monthly payments. If paying online isn’t an option, check to see if the service provider has a dedicated line for making payments by phone or call customer service.

Use a third party service

If you are interested in paying a bill with a credit card for a service provider that doesn’t accept credit card payments, look into using a service like Plastiq, which accepts your credit card payment, then forwards the payment via check or automatic transfer.

You can sign up for Plastiq for free, and most major credit cards are accepted, including rewards cards. However, you will pay a 2.5 percent fee on every bill using Plastiq.

If you’re considering a third party service, determine whether fees may wipe out any potential rewards you can earn by making payments with your credit card, and be even more diligent in paying your balances off; you don’t want to add high-interest payments on top of the fees you’re already paying.

It’s also important to consider the timing of your payments. It can take a payment from Plastiq up to seven business days to arrive, depending on the kind of payment sent.

Advantages of paying bills with a credit card

  • Earn points, miles and cash back on your regular spending. Consider a card like the Blue Cash Preferred® Card from American Express, which earns six percent cash back on select U.S. streaming services, to add value to your monthly Netflix and Hulu bills. Alternatively, the Citi® Double Cash Card offers one percent cash back on all purchases and another one percent when you pay them off, so any bill you pay using this card could add to your rewards total.
  • Meet the spending requirements for a welcome bonus. If you’re working towards a valuable welcome bonus, paying your bills with your credit card is a great way to leverage the payments you would make anyway without incurring extra charges just to meet the minimum spend.
  • Keep all your expenses together. If you’re working on your home budget, keeping both your everyday purchases and your monthly payments on one statement can help you more easily track all your spending and cut back on unnecessary expenses.

Disadvantages of paying bills with a credit card

  • Potential fees associated with credit card payments. If fees outweigh rewards earned, you may want to look at other options for your bill payments. Paying fees with every bill payment can quickly add up, costing you more over time.
  • You risk increasing your debt by charging bills you can’t afford. Make sure you’re able to pay off any bill payments you make using your credit card by the end of your billing cycle, before you begin incurring high interest on the balance.

Will payments affect your credit score?

Paying your bills with a credit card could have a positive or negative effect on your credit score, depending on how you handle paying off the charges.

If you are consistent in your credit card payments and keep your balances low, you may see an increase in your credit score over time. Payment history is one of the most influential factors in your credit score, so paying at least the minimum payment each month is crucial to keeping your credit score in a good place. Pay the balance in full, though, to keep from adding interest charges.

Paying your bills with your credit card can also impact another influential factor: credit utilization. Maintaining high balances on your credit cards each month is not good for your credit score; instead, you should aim to utilize under 30 percent of your total available credit. If you’re paying your bills with a credit card, regularly monitor the amount you spend compared to your available credit to ensure you’re not approaching the limit.

Bottom line

Paying your regular monthly bills with a credit card can help you earn rewards, enjoy purchase protections and work towards a minimum spend for a welcome bonus. You can even enjoy a bit of extra time after your bill payment is due before you must pay the charge on your credit card statement.

But you should be aware of any fees you’ll incur paying bills with a card and refrain from charging payments on your card that you can’t afford to pay off each month. Paying your balance in full and on time can help boost your credit score and keep you from accruing interest that will erase any rewards you may have earned in the first place.