You might be surprised to learn that you can use your credit card for many monthly expenses—from utility bills to rent. When you pay bills with a credit card, it can help you earn rewards, improve your credit score, and give you more flexibility with your cash flow.
Here's the caveat, though: It’s not as simple as swiping your card for every payment. There are certain things to keep in mind, like whether your payee accepts credit card payments, any potential fees they might charge to do so, and how this could affect your financial situation in the long run.
In this article, we’ll explore how to pay bills with a credit card, which bills you can pay, the steps you need to take, and the pros and cons to consider.
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So, can you pay bills with a credit card?
If the question is, “Can I pay my bills with a credit card?” the answer is yes. You can pay many of your bills with a credit card—but it depends on the payee and the type of bill.
Credit cards are widely accepted for various services, such as utilities, phone and internet, streaming services, and insurance premiums. However, the acceptance of credit cards can vary depending on the company or service provider.
Some companies may allow credit card payments with no extra charge, while others might add a processing fee ranging from 2% to 3% of the bill amount.
What bills can I pay with a credit card?
Some bills can easily be paid with a credit card, while others may have limitations or additional fees. Here's a breakdown of common bills you can often pay using credit cards:
- Utilities: Many electricity, gas, water, and cable/internet providers accept credit card payments.
- Mobile phone bills: Most cell phone carriers accept credit card payments.
- Landline phone bills: While less common, some landline providers accept credit card payments.
- Subscription services: Streaming platforms, gym memberships, and other recurring subscriptions often allow credit card payments.
- Rent and mortgage: While less common, some landlords or property management companies accept credit card payments directly, while others might allow you to pay through third-party services like Plastiq, which processes the payment for a fee.
- Medical bills: Hospitals, clinics, and other healthcare providers often accept credit card payments for medical bills.
- Taxes: In some cases, you can pay certain taxes, such as property taxes or income taxes, using a credit card, though there may be convenience fees.
- Insurance premiums: Many insurance companies accept credit card payments for premiums.
- Student loans: Some student loan servicers allow credit card payments, but be aware of potential fees.
Why pay bills with a credit card: 6 benefits
Here are some key advantages of using a credit card to manage your expenses:
1. Earn rewards and cash back
Many credit cards offer rewards programs that give you points, miles, or cash back for every dollar you spend. Over time, the rewards you earn can be redeemed for travel, statement credits, gift cards, or even direct deposits into your bank account. Some cards even offer bonus rewards categories, allowing you to maximize your earnings on specific bills.
2. Build and improve your credit score
Each time you use your credit card and make on-time payments, this positive activity is reported to the credit bureaus, which can improve your credit history and score. A higher credit score can open doors to better interest rates on loans, mortgages, and future credit card offers.
3. Payment protection and security
Credit cards offer robust fraud protection and security features that can give you peace of mind when paying bills. If your credit card information is compromised or if you notice unauthorized charges, you can dispute the transactions with your credit card issuer, and you’re generally not held responsible for fraudulent charges.
4. Flexibility and convenience
By putting your bills on a credit card, you can delay the actual payment until your credit card bill is due, giving you more time to gather funds. This can be particularly helpful if your income fluctuates or if you’re waiting for a paycheck. Additionally, many credit cards offer features like automatic bill payment, so you don’t have to worry about missing a due date.
5. Potential for emergency financial cushion
In times of financial strain, a credit card can act as an emergency cushion, allowing you to cover essential bills when you might not have enough cash on hand. While it’s important to use this option cautiously to avoid debt, it can be a lifesaver when you need to prioritize certain payments.
6. Access to additional cardholder perks
Many credit cards have additional perks that can enhance your overall financial well-being. For instance, some cards offer purchase protection, extended warranties, and travel insurance. Others provide access to exclusive events, discounts, or concierge services. Using credit cards to pay bills may unlock these extra benefits, adding even more value to your payment strategy.
Cons of paying bills with a credit card
While paying bills with a credit card has its perks, there are also some potential downsides to consider. Understanding these cons can help you decide whether this payment method is right for you.
Interest charges
One of the biggest risks of paying bills with a credit card is the potential for interest charges if you don’t pay off your balance in full each month. Credit cards often have high interest rates, and carrying a balance can quickly lead to significant debt. If you’re using your credit card for bill payments but can’t pay the full balance when it’s due, you’ll end up paying more in interest.
Fees for certain bill payments
Some payees may charge additional fees for paying with a credit card, especially for payments like rent, mortgage, or tuition. These fees can range from a small percentage to a flat fee, which can add up over time. It’s important to check with each payee to see if they impose any fees for credit card payments.
Impact on credit utilization ratio
Using your credit card to pay bills can increase your credit utilization ratio, which is the amount of credit you’re using compared to your total credit limit. A high credit utilization ratio can negatively impact your credit score, as it suggests to lenders that you might be overextended. To avoid this, try to keep your credit utilization below 30% of your total credit limit.
Temptation to overspend
Credit cards offer the convenience of deferring payment, but this convenience can sometimes lead to overspending. When you’re not immediately parting with cash, it can be easier to justify additional expenses or splurges. Over time, this behavior can lead to increased debt and financial strain, especially if you’re relying on credit because you don’t have enough cash to cover your bills.
Risk of fees for missed payments
If you miss a credit card payment due date, you could be hit with late fees, and your interest rate might increase. This can make your bill payments more expensive and stress your financial situation. If you’re using your credit card for bill payments, it’s crucial to stay on top of your due dates and ensure you have the funds to pay your balance in full each month.
How to pay a bill with credit card
Here's a step-by-step guide on how to pay bills with a credit card, whether you're doing it online, in-store, or by phone:
Step 1: Confirm the payee accepts credit cards
Not all companies do, and some may charge a fee for using a credit card. You can usually find this information on the payee's website, in your billing statement, or by contacting their customer service.
Step 2: Choose your payment method
You can typically pay bills with credit cards in three ways:
Online
- Log in to your payee’s website or app.
- Navigate to the payment section.
- Select “Credit Card” as your payment method.
- Enter your credit card details, including the card number, expiration date, and CVV code.
- Review the payment details, including any fees that may apply.
- Confirm and submit your payment. Be sure to keep a confirmation number or receipt for your records.
In-store
- Visit the payee’s location if they have a physical store or payment center.
- Provide your bill and your credit card to the cashier.
- The cashier will process your payment. Make sure to get a receipt as proof of payment.
By phone
- Call the payee’s customer service line.
- Choose the option to make a payment, and follow the prompts to pay with a credit card.
- Provide your credit card information when asked.
- Listen carefully to the payment details, including any fees.
- Confirm your payment and note any confirmation number given.
Before confirming your payment, make sure to check for any convenience fees involved. Some payees charge a fee for processing credit card payments, ranging from a flat fee to a percentage of the payment amount.
Step 3: Be aware of interest and late fees
Some common fees include:
- Interest charges: If you don’t pay off your credit card balance in full each month, you’ll incur interest charges on the amount you paid for your bills.
- Late fees: If you miss the payment deadline for your credit card, you could be hit with a late fee, which can add to your overall costs.
Always weigh the fees against the potential benefits, such as earning rewards or cash back. If the fees outweigh the benefits, you might want to consider an alternative payment method.
Step 4: Schedule your payments
To avoid missing a payment, consider setting up automatic payments for recurring bills. Many payees allow you to schedule automatic credit card payments, so you don’t have to remember each month. Just make sure you have enough available credit and that your credit card bill is paid off regularly to avoid carrying a balance.
Step 5: Pay off your credit card balance
To avoid interest charges, pay off your credit card balance in full each month. This helps you maximize the benefits of paying bills with a credit card, such as earning rewards and building your credit score, without the downside of accumulating debt.
Step 7: Keep track of due dates
When using a credit card to pay bills, it’s important to keep track of both the bill due dates and your credit card payment due date to avoid late fees and ensure you stay on top of your financial obligations.
FAQs
Is it better to pay bills with a credit or debit card?
It depends on your financial habits and goals. Credit cards can offer rewards, build your credit score, and provide fraud protection. However, if you’re not careful, you might accumulate debt and pay high interest on balances. Debit cards, on the other hand, directly withdraw funds from your bank account, helping you avoid debt, but they don’t offer the same rewards or credit-building benefits.
How to pay utility bills through credit card?
Paying utility bills with a credit card is typically straightforward. Most utility companies offer an online payment site where you can enter your credit card information. Alternatively, you can call the utility company’s customer service line to pay over the phone. Some companies also allow in-person payments at authorized locations. Just be mindful of any processing fees that might apply when using a credit card.
Are there any bills I shouldn’t pay with a credit card?
While many bills can be paid with a credit card, some may not be ideal due to potential fees or the impact on your credit utilization. For example, paying your mortgage with a credit card is often discouraged because of the high fees charged by third-party services that facilitate these transactions. Additionally, if you’re close to your credit limit, paying large bills with a credit card could negatively affect your credit score.
Can I use my credit card to pay off bills from another credit card?
Using one credit card to pay off another card directly isn’t possible. However, you can consider a balance transfer, where you move debt from one credit card to another, often with a promotional lower interest rate. Be cautious, though—balance transfer fees and the potential for high interest rates after the promotional period ends can add up.
What should I do if my credit card payment for a bill is declined?
If your credit card payment is declined, check that your card details were entered correctly and that your card has not expired. If everything seems in order, contact your credit card issuer to check for any problems like fraud alerts, insufficient credit, or temporary blocks. It’s also a good idea to have a backup payment method ready, such as a debit card or bank account transfer, to avoid late payment fees.