What Bills Can You Pay With A Credit Card? You may pay your expenses using a credit card, but there are dangers to be aware of. When you use a credit card to pay your expenses, here are nine things to keep in mind. Using a credit card isn’t only convenient while you’re purchasing at the store or online. When you use a credit card to pay your expenses, many of the same advantages apply. Using a line of credit to pay your monthly expenses may sound like a convenient way to avoid the inconvenience of writing a check and carrying cash, but there are both advantages and disadvantages to this method. This is what you should know before using a credit card to pay your expenses.
Five advantages of using a credit card to pay bills
Digital payments provide a number of advantages, particularly if you are an astute and cautious credit card user.
1. Automatic payments
Using your credit card to set up autopay for bills has a few perks in and of itself. For instance, if you’re juggling many payment deadlines, it’s simple to fall behind on a payment. Utilizing your credit card to pay monthly bills enables you to avoid incurring a late charge (and possibly keep the lights on). This is especially advantageous for fixed-fee monthly expenditures, such as a gym subscription.
2. Earn points or rewards
Experian reports that 42% of customers use a credit card to earn rewards points. As more rewards programs provide valuable advantages for cardholder purchases, including regular invoices in your card activity may help you earn more rewards points faster. With the numerous rewards credit cards offered from various credit card providers, you may select between cash back and travel benefits.
3. Meet sign-up bonus requirement
Put your bills on your credit card to get additional points if you’ve recently purchased a new rewards card with a sign-up bonus offer! In this way, you can satisfy the minimum spending criteria for your card faster and so have a higher chance of maximizing the bonus offered by your card.
4. Track your spending
You’ll be able to keep track of all of your payments by using a credit card to make all of your bill payments. When it comes to setting a budget, having access to your credit card account’s current and historical spending activities is invaluable.
5. Extra purchase protections
The consumer safeguards offered by many credit cards, such as 0% responsibility for fraudulent transactions, are well-known. An improper bill payment, for example, may be remedied by calling your card issuer as soon as you notice unusual activity on your credit card.
In contrast, this is not the case if you pay using another method. If a check or cash payment is stolen or lost in transit, you have just the barest of protections. If you want to quit using your debit card, a credit card is an excellent alternative. In order to avoid fraud, debit cards should be used only when absolutely necessary.
4 reasons paying bills with a credit card is risky
The few benefits of paying monthly expenses with a credit card are alluring, but there are also dangers to be aware of.
1. Extra fees
The convenience of using a credit card to pay one’s expenses may come with a price. Some service providers charge a convenience fee for using a credit card in order to pass on the cost of credit card processing to customers.. Taxes paid by credit card include an extra 1.87 percent to 1.99 percent cost, depending on the payment processor you use, as of May 2019 for example.
2. Racking up interest
Adding interest to your monthly spending is inevitable if you’re unable to make a complete payment on your credit card account within the statement cycle. Paying your statement balance in full each month can avoid this danger, but that’s not always possible, and your bills will be considered like any other transaction and carried over to the following payment period.
3. Accumulating debt
Many people believe credit cards are harmful when they’re not utilized properly. Debt-ridden people should avoid adding their expenses to their accounts if they can’t pay off their credit card amount in full each month.
4. Credit utilization ratio might rise
Your credit usage ratio may suffer if you use a credit card to pay your payments. The credit usage ratio measures how much credit you’ve used vs how much you still have. Using a credit card to pay your expenses improves the amount of credit you have available to you. A low credit-to-debt-to-income ratio is important since it accounts for 30% of the FICO score.
How to make a credit card payment
Payment via credit card may be as easy or as complex as you want it to be. However, not every service provider accepts credit cards without complications.
Bills that can be paid using a credit card include the following:
- Bills for household services
- Services that require a monthly or annual fee
- Memberships to gyms
- Cable and the Internet
- Insurance for your car
- Expenses associated with medical care
However, using a credit card to pay for some expenses, such as installment-based debt, may be more difficult. A few examples:
- Mortgage or rent
- Auto loan
- Student loans
Plastiq and other workarounds may be useful if you’re determined to utilize your credit card for as many invoices as possible. For a set cost, Plastiq is a third-party service that pays your invoices using your credit card. A cheque, wire transfer, or ACH bank transfer is the method of payment you may expect from the firm.
If you wish to pay a bill using a credit card, there are a variety of ways to do it. You should always check with your service provider to see if they accept credit card payments and if using a card incurs any additional fees.
Do not use your credit card to pay your bills if you can avoid it.
A person should consider the advantages and disadvantages of paying using a credit card on a case-by-by-case basis. Determine how much money you could save by using a credit card to pay your expenses, and then compare that dollar number to the charge amount to see whether it is worth it. It’s up to you to determine if the ease of using a credit card to pay your expenses outweighs the time and headache it will save you.
A simple method is to record how long it takes you to pay off all of your expenses without a credit card, and how much money it costs. Include, for example, the cost of making checks or withdrawing cash, the cost of stamps and envelopes, the cost of driving to the post office, and any other incidental costs that may arise. After that, figure out how much you’ll pay in convenience fees for all the payments you intend to pay with a credit card.
To use a credit card to pay your expenses may not be the best option if the fees you’re paying outweigh the value of the incentives you receive. The power provider charges a 3 percent processing fee on your $100 energy bill even though you’re paying it using a 1.5 percent reward card. Only $1.55 in cash back will be earned for the $103 transaction.
On a $100 electricity payment, you’ve really spent $101.45 after subtracting your cash back ($103 – $1.55). In this circumstance, there is no genuine benefit for you. You’re spending more money than you need to. Paying using a credit card is not worth it in this situation.
The best credit card to pay your bills
Credit cards may be a convenient way to pay your rent or mortgage if you know how to use them wisely. Expenses like a significant future payment, for example, might be a simple way to obtain a high-value sign-up bonus.
Also check to see whether it has a 0% APR credit card, which means you won’t be charged interest on your bill payments for a predetermined period of time. Paying your credit card amount in full each month means you won’t have to worry about the interest rate, so you can instead focus on other aspects of your expenditure, such as collecting bonus points.
The Citi Double Cash Card is a convenient way to pay payments and make regular purchases with only one card. A new cardholder can transfer high-interest debt to the card for 18 months at 0% APR (then 13.99 percent to 23.99 percent (variable)). In addition, they can receive up to 2 percent cash back on all their transactions.
The Chase Freedom Unlimited is another wonderful option, since cardholders earn 5% on travel purchased through Chase Ultimate Rewards, 3% on dining and pharmacy expenditures, and 1% on all other transactions with the Chase Freedom Unlimited.
Depending on how much you spend in the first year, you could get an additional 1.5 percent cash back as a sign-up bonus. For the first 15 months, the APR is 0% (after 14.99 percent to 23.74 percent, depending on the purchase price).
You can earn 5% cash back on two bonus categories each quarter when you use the U.S. Bank Cash+ Visa Signature Card. Home utilities; phone providers; and TV, Internet, and streaming services are among the options available. For daily expenditures (gas stations, grocery shops, or restaurants), you’ll earn 2% back; for all other transactions, you’ll get 1% back.
For those looking for a card that offers limitless 1.5 percent cash back on all purchases every day and a potential $200 cash back incentive after spending $500 in the first three months after establishing an account, the Capital One Quicksilver Cash Rewards Credit Card is the best option out there.