Can You Pay Bills with a Credit Card: Here’s When It’s a Good Idea

Credit cards make shopping easier, and they can also make paying your bills on time a breeze. You have to pay bills one way or another, so why not let them count toward improving your credit score and earning you cashback rewards.

Of course, there are some risks that come with using your credit cards for paying bills. Here’s what you need to know to maximize your benefits while keeping your budget on track.

Can you pay bills with a credit card?

Yes, it’s possible to pay bills with a credit card, but it may not make sense for all bill types.

Some companies charge a credit card processing fee, whereas paying directly through the company’s website or setting up bill pay through your bank account is typically free.

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.

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.

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.

I use the Chase Sapphire Preferred^® Card card to pay our monthly $200 T-Mobile bill and earn roughly $24 per year in rewards. If I were to switch to a different credit card, such as the Wells Fargo Active Cash^® Card, we could double our annual rewards. While $48 per year isn’t a lot for one bill, I could easily do the same with other bills that don’t charge a service fee and earn up to $400 in cashback rewards — all for doing what I was already doing, paying my bills.

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, paying your federal taxes with a credit card will add an additional 1.82% to 1.98% 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.

This is where starting with cards that offer a 0% intro APR can save you money as you get your system down.

3. Accumulating debt

Credit cards have a reputation for being a dangerous tool when used without control. If you’re already struggling to get 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.

One way to combat this is to set your credit card repayments on automatic bill pay through your bank. If you owe $200 for the internet each month, schedule two recurring payments: one from the credit card to the company and one from your checking account to the credit card.

4. Credit utilization ratio might rise

Depending on your credit profile, paying bills with a credit card might hurt your credit utilization ratio if you don’t pay off your balance at the end of each month. 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 if you don’t pay it off within the billing cycle. Considering that 30% of your FICO credit score relies on this ratio, it’s best to keep your account balances as low as possible.

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.

Best credit cards to use for bills explained

• Ideal for balance transfers: The Citi Double Cash^® Card is great for paying bills and for everyday purchases. You can 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 18.74% - 28.74% (Variable)).
• Best for travel lovers: 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 offer allows 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 19.99% - 28.74% Variable).
• Ideal for cash back flexibility: With the U.S. Bank Cash+^® Visa Signature^® Card, you can 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, cell phone providers, and TV, Internet, and streaming services. You can also earn 5% back on prepaid 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.
• The best welcome offer: 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 after you spend $500 in the first 3 months after account opening.

FAQs

Bottom line

Yes, you can pay off your bills with credit cards, and in many cases, using rewards credit cards will help put money back in your pocket. I’ve even known people who use this strategy to save for holiday spending — i.e. they don’t touch their credit card’s rewards or cashback until December and that’s their Christmas budget.

But not all bills are worthwhile to pay with a credit card. Sometimes you will have to pay a fee or it can cause you to develop poor debt habits. Weigh the costs against the benefits to ensure you come up on top when using a credit card.

Lucrative, Flat-Rate Cash Rewards

Wells Fargo Active Cash^® Card

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Wells Fargo Active Cash^® Card

Apply Now

Rates and fees

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

Rewards Rate

Earn unlimited 2% cash rewards on purchases

Benefits and Drawbacks

Benefits

• Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
• Cell phone protection benefit (subject to a $25 deductible)
• Can redeem rewards at an ATM for literal cash

Drawbacks

• Foreign transaction fee of 3%
• No bonus categories

Card Details

• Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
• Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
• Earn unlimited 2% cash rewards on purchases.
• 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
• $0 annual fee.
• No categories to track or remember and cash rewards don’t expire as long as your account remains open.
• Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
• Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.