In summary, using credit cards to pay your monthly bills can help you earn rewards more quickly, but are there any drawbacks? Depending on the bill, using a credit card to pay it might make sense. 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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In today’s fast-paced world, convenience is king. And what could be easier than paying all of your bills with your credit card? However, before you swipe your way to bill-paying bliss, you might be wondering if using a credit card to pay bills actually earns you points.
The answer, like most things in finance, is a bit of a “yes, but…” situation. Let’s dive into the details and see if using your plastic for bills is a points-earning paradise or a reward-free wasteland.
The Good News: Yes, You Can Earn Points for Paying Bills
The good news is that many credit cards offer rewards for paying bills. This means you can potentially rack up points, miles, or cash back just for taking care of your monthly expenses.
Here are some types of bills you can often pay with a credit card and earn rewards:
- Utilities: Water, electricity, gas, internet, and cable bills are all fair game for earning points with some cards.
- Rent: Some landlords and property management companies accept credit card payments, opening the door to potential rewards.
- Medical bills: For smaller medical expenses, using a rewards card can be a smart way to earn points while managing your health.
- Taxes: Believe it or not, you can even pay your taxes with a credit card (although there’s usually a fee involved).
However, there are a few things to keep in mind:
- Not all cards offer rewards for bill payments. Some cards specifically exclude bill payments from their rewards categories.
- You might have to use a third-party service. Some cards require you to use a third-party service like Plastiq or PayNearMe to pay bills and earn rewards. These services typically charge a fee, so be sure to factor that into your calculations.
- There might be a limit on how much you can earn. Some cards cap the amount of rewards you can earn on bill payments.
The Not-So-Good News: There Are Some Caveats
While earning points for paying bills sounds great there are a few potential downsides to consider:
- Fees: As mentioned above, some third-party services charge fees for processing bill payments with a credit card. These fees can eat into your rewards earnings, so be sure to compare the cost of the service to the value of the rewards you’ll earn.
- Interest charges: If you don’t pay your credit card bill in full each month, you’ll be charged interest on the balance. This can quickly negate any rewards you’ve earned, so it’s crucial to be mindful of your spending and pay your bills on time.
- Not all bills are eligible: Some bills, like mortgage payments and student loans, typically can’t be paid with a credit card.
So, Should You Pay Bills with a Credit Card?
Whether or not you should pay bills with a credit card depends on your individual circumstances and financial goals Here are some factors to consider:
- Do you have a rewards credit card that offers points for bill payments?
- Are you comfortable paying your credit card bill in full each month?
- Are you willing to pay any associated fees?
- Do you have other ways to earn rewards, such as through cash back apps or loyalty programs?
If you answered yes to all of these questions, then paying bills with a credit card could be a good way to earn extra rewards. However, if you’re not sure, it’s best to err on the side of caution and stick to using your credit card for everyday purchases.
Tips for Maximizing Your Rewards
If you decide to pay bills with a credit card, here are a few tips to help you maximize your rewards:
- Choose a card that offers a high rewards rate for bill payments.
- Use a third-party service that charges low fees.
- Set up automatic payments to ensure you never miss a due date.
- Pay your credit card bill in full each month to avoid interest charges.
By following these tips, you can turn your bill-paying routine into a points-earning bonanza.
Paying bills with a credit card can be a great way to earn rewards, but it’s important to weigh the pros and cons before you swipe. By carefully considering your financial situation and choosing the right card, you can make the most of this convenient and potentially rewarding option.
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?.
You must assess each bill to decide which ones make sense to pay with a credit card because not all bills are made equal. 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
Generally speaking, if you can follow these two guidelines, using a credit card to pay your monthly bills can be a smart idea.
- Make sure you pay off the entire balance on your statement each month on time.
- If you can’t afford to pay your bills with cash, don’t put them on credit.
If you’re having trouble paying your bills, a credit card could buy you a little time. However, using your credit card to pay for things you can’t afford on a regular basis could worsen your situation and cost you a lot of money in interest. On the other hand, there are advantages to using a credit card when paying regular bills that fit within your means.
Now that you know which bills you can pay with a credit card and which ones will charge you extra, let’s examine which bills are best suited for credit card payments.
Mortgages, which typically represent the largest monthly outlay for most people, appear to be a simple means of obtaining a credit card sign-up bonus or accruing substantial points.
Sadly, virtually no mortgage servicers will allow credit card payments. And for good reason—lenders prefer not to pay credit card processing fees for handling payments.
Be ready to pay a convenience fee that will probably outweigh the benefits you’re hoping to receive if you’re fortunate enough to find a mortgage servicer who will let you pay your mortgage with a credit card.
If you don’t mind a fee, third-party services such as Plastiq might be a good option for you. For a standard 2. The company charges your credit card for 9% of the total amount, and then sends a check to your mortgage lender (or whoever else you choose to pay). Before using this type of service, you’ll have to calculate if the fee is worth the rewards.
If you are renting rather than buying a home, it may still be difficult to find a landlord who will take a payment for your rent each month other than cash or a check.
Consider using your credit card to pay your rent if you’re fortunate enough to rent from an organization with more advanced bookkeeping, especially if there is no cost for the convenience.
You could use a service like Plastiq or search for a credit card that enables you to pay rent through its own portal even if your landlord only takes cash or checks. There are costs associated with each of these options, such as convenience fees, interest, or other charges, but you are the one who must determine if they are worth it.
Auto lenders, like mortgage lenders, aren’t likely to accept credit card payments. They, too, want to avoid the processing fees.
It is possible to pay off your auto loan with a credit card, but it takes severe financial self-control. You might be able to transfer your auto loan to the credit card if you find a credit card offer with an introductory annual percentage rate of 200% for balance transfers. But before you jump on this idea, there are caveats.
This option only makes sense if the card you select has an introductory APR of up to 200 percent for balance transfers. Also, you’ll need to pay off the balance before the rate goes up after the introductory period. If not, interest will be charged on the credit card’s outstanding balance, which is likely to be more than the credit card’s initial auto loan interest rate.
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. Additionally, transferring a sizable balance will raise your credit utilization, which will probably have a negative effect on your 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.
CJU- LEARN HOW TO USE CREDIT CARDS TO PAY YOUR BILLS
FAQ
Is it better to pay your bills with a credit card?
Is paying a bill with a credit card considered a cash advance?
Does paying bills increase credit score?
Can you pay bills with a credit card for points?
Yes, you can pay most bills with a credit card for points, as long as you have a credit card that offers this type of rewards. Plus many issuers will offer you extra points for paying certain bills with a credit card. Some eligible expenses include utilities, rent, medical bills, and taxes, among others.
Should you pay bills with rewards credit cards?
Smart cardholders can plan and earn cash, points and other perks by paying bills with rewards credit cards. Paying as many bills with reward cards as possible can rake in rewards, but be sure to pay balances in full – so hefty interest on these credit cards doesn’t negate your rewards.
Should I pay with my credit card?
If the rewards you earn per dollar charged are only worth 2 cents each, then, no, you should not generally pay with your credit card. It’s typically only worth paying a fee if the value you’re earning on rewards credit card is more than the fee paid. But that math can get a little more involved on some cards.
Should you pay monthly bills with a credit card?
Paying monthly bills using a credit card can not only be convenient, it can be profitable because you’ll probably be able to earn rewards like miles, points or cash back. Plus, there are some credit cards that offer superlative benefits like cellphone insurance, giving you extra protection for choosing to pay with plastic.