Monthly Bills It Pays To Pay With A Credit Card
On the other hand, many credit cards offer rewards and points for use, and they can be a great, easy way to automate payments so you dont have to worry about immediate cash flow or bank balances. Experts recommend which kinds of monthly bills you should pay by credit card.
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Should I Put Bills On My Credit Card
Having your monthly bills paid with your credit card automatically can be an excellent use of your access to credit, because it ensures that you’re paying your bills on time, and possibly earning reward points in the process.
But it only really works in your favor over the long term, if you make sure that you’re paying off your entire credit card balance at the end of each month. If possible, set up automatic payments so that you can keep up with payments each month and make sure to monitor your balance to ensure it does not accumulate to more than you are able to pay off.
When You Should Pay A Monthly Bill With A Credit Card
There are many advantages to paying your monthly bills with a credit card.
Since these are normal charges youll pay on a regular basis, you may as well earn points or miles on these purchases as you rack up expenses each month. There are some services that dont allow you to directly pay with a credit card. For example, I can only use a debit card, checking or savings account for my own car payment.
Some credit cards offer bonus points on certain types of purchases. Some of your monthly bills may fit into these categories, helping you earn additional rewards.
Related: Paying rent and mortgages with a credit card
For example, my Chase Freedom Flex card is one of my favorite cash-back cards thanks to its 5% bonus on rotating categories each quarter . From January to March of this year, it awarded 5% on internet, cable and phone services, as well as select streaming services. During these three months, I was easily able to earn a lucrative 5% back on my internet and cell phone bill, as well as my various subscriptions from Hulu to Netflix.
Related: Guide to saving money on streaming services
On a similar note, youll want to be strategic about which credit card you use to pay for your cell phone bill.
Some cards offer cell phone loss and damage protection, potentially saving you hundreds of dollars. Many Amex cards offer this benefit, as well as cards such as the Ink Business Preferred Credit Card.
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Earn Points Or Rewards
According to Experian, 42% of consumers use a . 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 that are available from the various credit card companies, you could choose whether you want to earn cash back or travel rewards.
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How Payments Are Applied To Your Balance
If you dont pay your entire credit card balance by the due date, youll pay interest.
Different interest rates may apply to different types of credit card transactions. For example, cash advances often have a higher interest rate than purchases. This means different interest rates will apply to your balance depending on how you use your credit card.
Typically, your minimum payment will apply it to the portion of your balance with the lowest interest rate. Any amount you pay over the minimum payment applies in one the following two ways:
- to the portion of the balance with the highest interest rate
- proportionally to the entire balance
A credit card issuer that is a federally regulated financial institution can decide how it will apply your minimum payment to your balance.
Check your credit card agreement or ask your credit card issuer how it applies a payment to your balance.
How To Pay Bills With A Credit Card The Right Way
If youre planning to pay bills with a credit card, here are a few best practices to keep in mind:
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Stay On Top Of Your Credit Card
If you decide to pay bills using your credit card, then its more important than ever to keep up with payments. Pay as much as you can on time each month to help minimize interest payments and avoid fees. Learn more tips on managing credit card payments.
This article is intended to provide general information and shouldn’t be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.
The Bottom Line On Paying Bills With A Credit Card
Find the best rewards credit card that aligns with whats 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 cards 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 its 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.
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What Is A Credit Card Balance
When you use a credit card to make a purchase, the amount you charge is added to what you owe in total, typically referred to as your credit card’s balance. Your balance is not just the sum of your purchases, however. It also includes the interest you owe on your balance, as well as any fees and penalties the card issuer has charged you. Those may include annual fees, foreign transaction fees, cash advance fees, late payment penalties, and many others, as we’ll explain later.
At the end of each monthly billing cycle, the card issuer will tell you how much you owe, the minimum payment it requires from you, and when that payment is due. By making at least the minimum payment, and making it on time, you’ll stay in good standing with your credit issuer. The remaining balance then rolls over into the next months balance and continues to accrue interest. For that reason, it’s best to pay more than the minimum and, ideally, to pay off your balance in full each month.
Making just the minimum payment and rolling your balance over to the next month will not affect your credit score. However, if you’re carrying too large a balance relative to your total credit limit, that can be a problem. Prospective lenders consider your in deciding how risky it might be to lend money to you. Someone who routinely maxes out their credit card will seem less financially responsible than someone who keeps a good portion of their available credit in reserve, just in case.
Accumulating Credit Card Points And Rewards Is Addictive And Were All On The Lookout For New Ways To Obtain Them
Paying your monthly bills seems like a great way to earn more rewards. But is it wise to pay your bills with credit cards?
Not all bills are created equal, so youll need to evaluate each one to determine which ones make sense to pay with a credit card. But first, heres a quick look at the pros and cons of paying bills with plastic.
| Pros |
Generally speaking, paying your monthly bills by credit card can be a good idea as long as you adhere to two rules.
If you use your credit card to pay bills you cant afford, you could end up paying a lot in interest. On the other hand, if youre paying routine bills, using a credit card has benefits.
So which bills can you pay with a credit card? And which bills will charge an extra fee if you pay with a card? Lets look at which types of bills make the most sense to pay by credit card.
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When Do You Receive Your Credit Card Bill
Every credit card issuer has a billing cycle that generally lasts between 20 and 45 days. Youll receive your at the end of your billing cycle, either by mail or electronically, depending on your preferences.
The requires credit card issuers to give consumers at least 21 days between the date the statement is mailed or delivered and the date the payment is due. This gives you time to decide whether you want to make the required minimum payment, pay off your statement in full or make a partial payment against your balance.
Your credit card bill due date should be the same date every month and you should expect to receive your credit card bill on or around the same date each month. Its a good idea to keep track of when you can expect your credit card statement in the mail or your inbox. That way, you can give yourself enough time to review your statement, dispute any unfamiliar charges and make your payment.
How To Pay Credit Card Bills
The best way to pay credit card bills is online with automatic monthly payments deducted from a checking account. This minimizes the chances of missing a credit card payment due date, and it can also help cardholders avoid interest charges, depending on the type of payment scheduled. You can schedule an automatic credit card payment for the full balance due, the minimum payment or a custom amount.
In other words, paying credit card bills actually can be pretty simple if you want it to be . In fact, we can break the process down into these straightforward steps.
How to Pay Credit Card Bills in 5 Steps:
You can learn more below, including other ways to pay credit card bills, the effects of different payment strategies, and tips to help you save time and money.
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Chase Freedom Flex: Best For Cellphone Payments
Why we picked it: Though the Chase Freedom Flex doesnt earn cash back rewards on cellphone bills, it does provide cellphone protection if you pay your monthly bill with the card. The cards cellphone protection covers up to $800 per claim and $1,000 per year against theft or damage for phones on your monthly cellphone bill. You may file a maximum of two claims in a 12-month period.
In terms of rewards, the Chase Freedom Flex is an excellent cash back credit card. It gives you 5% cash back on rotating bonus categories on categories you must activate, 5% cash back on Lyft purchases , 5% cash back on travel booked through Chase, 3% cash back on dining and drugstore purchases and 1% on general purchases.
Pros
- $200 if you spend $500 in first three months
- No annual fee
- Transfer points to a premium Chase travel card
- Flexible redemption options
- $1,500 spending cap on rotating categories
- Must activate categories before earning 5% cash back
Who should apply: If you love pairing cards to maximize travel points, the Chase Freedom Flex wont let you down.
Who should skip: If you think youll forget to activate categories once a quarter, you should skip. Anyone whod prefer to earn rewards directly on their monthly bills instead of protection, should skip as well.
Using Credit Cards Abroad
Travel credit cards are designed for overseas use, and their benefits often include:
- No charge for cash withdrawal abroad
- No fees when you use it for purchases overseas
- Good foreign exchange rates
- Purchase protection if you use them abroad
However, they usually come with high APRs, so paying them off in full as soon as the statement arrives is important if you can.
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Paying More Than The Minimum
While you should always strive to pay your full account balance each month, doing so isnt always possible. In such cases, paying as much as you can above the minimum required is essential, as it will minimize the balance on which interest accrues. Keep in mind, however, that payments above the minimum will not be credited to the following month. Obviously, if you have zero balance or a negative balance at the end of the billing period, there will be no payments required the following month. In fact, creditors are required to mail you a check if you maintain a negative balance for long enough.
How I Use My Credit Card And Debit Card
I use my credit card to make monthly bill payments, including utility, mobile, landline, cooking gas, fuel, road toll Salik, smart card for transport Nol, medical, etc. I make sure that I pay the total amount of bills on the due day itself so that I don’t have to pay the interest on credit cards.
On the other hand, my debit card indicates how much money I have in my account. When a bill is due, I don’t pay it from my debit card, but I use the credit card. That way, I’ll get some time to repay the amount and valuable credit card points as well without paying any extra amount to the bank.
I also make sure that I don’t use several credit cards. When you use only one credit card, you have control on your spending and know how many points you have earned per month. Having too many credit cards makes it difficult to keep track of your spending and would be an unnecessary distraction. It also helps me boost my credit score because I pay the total amount on the due date.
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Getting The Most Cashback From Your Bills
Depending on your credit card, you could be earning significant cashback when paying your bills. Let’s take a look at each option more in-depth, to see how to get the most cash back while avoiding unnecessary fees.
Note- This article is not financial advice. Please spend responsibly when using your credit card.
When Paying Bills With A Credit Card Makes Sense
While credit cards can serve as short-term loans when you’re in a pinch, they also offer one heck of a convenience factor. By putting many of your daily purchases on credit, you can avoid carrying around a hunk of cash and writing checks. And by taking advantage of your card’s account management features and perks, you can track your spending and even earn some lucrative cashback or travel rewards.
But, should you pay all of your regular bills with credit? At the end of the day, it depends on an array of factors only you know. Plus, some bills are more suitable to be paid with credit than others.
Here are some times when credit makes sense and when it doesn’t.
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