Paying Bills With a Credit Card: When It's a Good Idea (and When It's Not) (2024)

The convenience of a credit card isn’t limited to everyday shopping purchases at the store or online. Many of the same conveniences apply when you pay bills with your credit card. Although it might sound ideal to avoid the hassle of writing a check and carrying cash payments around, there are pros and cons to using a credit card for your monthly bills.

Here’s what you need to know before putting your bills on a card.

How to pay bills with a credit card

Setting yourself up to pay bills with a credit card can be simple, depending on the bill you want to pay. And you could even earn credit card rewards. However, not all providers offer hassle-free credit card payments.

Types of bills that commonly allow credit card payments include:

• Household utility bills
• Subscription services
• Fitness memberships
• Cable and internet
• Cell phone
• Car insurance
• Medical bills
• Taxes

But when it comes to repaying certain bills, such as installment-based debt, paying with a credit card might be more challenging. A few examples are:

• Mortgage or rent
• Auto loan
• Insurance
• Student loans

If you’re determined to use your credit card for as many bills as possible, workarounds such as Plastiq might help. Plastiq is a third-party service that uses your credit card to pay your bills on your behalf for a flat fee. The company sends your payment as either a check, wire transfer, or ACH bank transfer.

Regardless of what type of bill you want to pay with a credit card, payment options will vary by provider. Always ask your provider whether they accept credit card payments and if there’s a convenience fee or processing charge to use a card.

Best credit cards to pay bills and earn rewards

If you’d like to try using a credit card to pay your rent, mortgage, or other bills, be strategic about which card you use. A large upcoming bill, for example, could be a convenient expense to help you earn a high-value sign-up bonus.

Also take a close look at whether or not it's a 0% intro APR credit card,which allows you to avoid interest charges on your bill payments for a set time. Although if you're paying your card balance off each month, then you really won't have to worry about the interest rate, and you can focus on things like earning bonus points for your spending.

The Citi Double Cash Card is great for paying bills and for everyday purchases. You’ll earn up to 2% cash back on all your purchases, plus as a new cardholder you can transfer high-interest balances to the card and get 18 months at 0% intro APR (then 19.24% - 29.24% (Variable)).

The Chase Freedom Unlimited is also a good choice — cardholders earn 6.5% cash back on travel purchased through Chase Travel℠, 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service and 3% cash back on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, earn 5% cash back on travel purchased through Chase Travel℠, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service and unlimited 1.5% cash back on all other purchases. The welcome bonus offers you the chance to earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year). It also has an intro APR of 0% on purchases for 15 months (then 20.49% - 29.24% Variable).

With the U.S. Bank Cash+ Visa Signature Card, you will earn 5% cash back on two categories you choose (up to $2,000 in combined eligible purchases each quarter). The bonus categories you can choose from include home utilities; call phone providers; and TV, Internet, and streaming services. You’ll also get 5% back onprepaid air, hotel, and car reservations booked directly in the Rewards Center, 2% back on one everyday category, like gas stations/EV charging stations, grocery stores, or restaurants (you get to choose), and 1% back on all other eligible purchases.

Finally, the Capital One Quicksilver Cash Rewards Credit Card is an overall winner, offering unlimited 1.5% cash back on every purchase, every day; and 5% cash back on hotels and rental cars booked through Capital One Travel (terms apply), plus a potential $200 cash bonus bonus after you spend $500 in the first 3 months after account opening.

When should you not use a credit card to pay bills?

Whether the benefits of using a credit card outweigh the potential fees should be determined on a case-by-case basis.

If you’re interested in paying your bills with a credit card so you can maximize your rewards points, calculate the dollar value of the rewards points you could earn, then compare that dollar amount with the fee amount. However, if your main incentive to pay bills with a credit card is the convenience, you’ll need to personally decide whether the saved time and hassle is more valuable to you.

One way to check this is by noting how long (and how much money) it takes you to pay all of your bills without a credit card. For example, include writing checks or withdrawing cash, buying stamps and envelopes, driving to the post office, and other ancillary expenses. Next, calculate the estimated convenience fees for all the bills you plan on paying with a credit card — this gives you a full picture of what you’ll pay on fees alone.

If the fees you’re paying for using a credit card to pay bills are more than the value of the rewards you earn, you might not want to take this route. Imagine you pay your $100 electric bill with a 1.5% cashback card, but the power company adds on a 3% processing fee for using your credit card. You’ll pay $103 for that transaction and earn only $1.55 in cash back ($103 x .015 = $1.55).

When you subtract the cash back from the total amount paid ($103 - $1.55), you’ve actually spent $101.45 on a $100.00 utility bill. You’re not getting any real reward in this situation. You’re actually spending more than you have to. In this case, paying with a credit card is not worth it.

5 advantages if you pay bills with a credit card

Digital payments offer many benefits, especially if you’re a savvy and responsible credit card user.

1. Automatic payments

Placing bills on autopay through your credit card offers a few advantages in itself. For example, if you’re juggling multiple due dates, it’s easy to miss a payment deadline. Using your credit card for monthly bills helps you avoid a late fee (and possibly keep the lights on). This is especially helpful for monthly bills that are a fixed amount, like a gym membership.

2. Earn points or rewards

According to Experian, 42% of consumers use a credit card to earn rewards points. As more rewards programs offer high-value perks for purchases put on your card, adding recurring bills to your card activity could earn you more rewards points faster. With all the rewards credit cards that are available from the various credit card companies, you could choose whether you want to earn cash back or travel rewards.

3. Meet welcome offer requirements

Speaking of rewards points, if you recently opened a new rewards card that’s offering a welcome bonus promotion, putting your bills on your credit card may help you qualify. By putting your monthly bills on your card, you could meet your card’s minimum spending requirement sooner, giving you a better chance at maximizing your card’s bonus.

4. Track your spending

By putting your bill payments on your credit card, you’ll see all incoming and outgoing transactions and have a record of your payments. Your credit card account also gives you quick access to your current and historic spending activity, which is helpful when planning a budget.

5. Extra purchase protections

Many cards are known for offering exceptional consumer protections, like zero liability for fraudulent charges. As soon as you identify suspicious activity on your credit card, such as a bill payment made for an incorrect amount, your card issuer can help you rectify the error.

This is not the case when you use other forms of payment. You have minimal safeguards available if a check or cash payment is lost or stolen while in transit. And a credit card is a great option if you're looking to stop using a debit card. Debit cards open up many risky opportunities for fraud to happen.

4 reasons paying bills with a credit card is risky

The handful of reasons to pay bills with a credit card are tempting, but there are also pitfalls associated with using credit for your monthly bills.

1. Extra fees

The ease of paying bills using a credit card can come at a cost. Some service providers charge a convenience fee to use a credit card in order to pass on their credit card processing fee to consumers. For example, as of May 2019, paying your federal taxes with a credit card will add an additional 1.87% to 1.99% fee to your total amount due, depending on the payment processor you choose.

2. Racking up interest

If, for any reason, you’re unable to pay off your credit card bill in full within its statement cycle, you’ll accrue credit card interest on top of your monthly expenses. Although this risk can be eliminated by simply paying your statement balance entirely each month, life happens and your bills are treated like any other transaction that rolls over into the next payment period.

3. Accumulating debt

Credit cards have a reputation for being a dangerous tool when used without control. If you’re already struggling toget out of debt and can’t repay your credit card balance in full each month, adding your bills to your account and increasing your credit card debt will only worsen your financial stability.

4. Credit utilization ratio might rise

Depending on your credit profile, paying bills with a credit card might hurt your credit utilization ratio. Your credit utilization ratio is the amount of credit you’ve borrowed compared to your available credit. Lenders look at your credit utilization when deciding whether to offer you a loan.

Putting your bills on your credit card increases your credit utilization. Considering that 30% of your FICO credit score relies on this ratio, it’s best to keep your account balances as low as possible.

Commonly asked questions about using credit cards for bills

The bottom line on paying bills with a credit card

Find the best rewards credit card that aligns with what’s important for you when it comes to day-to-day use. If you can, try to get more out of paying your bills by earning credit card rewards. Consider the terms of a card’s rewards program, too, making sure the highest-earning bonus categories are in the areas you spend the most.

Paying your bills with a credit card is generally possible, but it’s not always free. Whether you pay your bills with a credit card or stick to other methods of payment, knowing where your provider stands on credit card payments can keep you informed if you ever need the option.