It may be possible to pay some or all of your bills with a credit card. Using a credit card in this way can help you earn rewards like cash back and travel points.
But it’s not always the right financial move. Keep reading to learn what bills you can pay with a credit card and how using a credit card to pay bills works.
Table of Contents
Key Points
• Certain bills can be paid with a credit card, but it’s recommended to only do so if you can pay the balance in full right away to avoid high interest and fees.
• Paying bills with a credit card responsibly may help you build your credit history and earn rewards, but you’ll need to ensure any processing fees don’t cancel out your rewards.
• Common bills like streaming, cable, phone, and internet can often be paid by credit card without extra fees, while others, like utilities, may involve fees.
• Lenders for mortgages generally don’t accept credit cards directly, and may involve higher fees when they do.
• If financially strapped, charging debt payments to high interest credit cards will likely make your debt grow faster. Another option is to trade in credit card debt for a fixed, lower-interest personal loan.
Can You Pay Bills With a Credit Card?
Yes, it is possible to pay certain bills with a credit card. However, using a credit card responsibly is key.
When using a credit card to pay bills, it’s important to make sure doing so won’t cause you to rack up a high balance. Paying bills with a credit card makes the most sense when you can easily pay off your credit card balance in full right away.
If done responsibly, a card holder can earn credit card rewards — like cash back, travel points, and gift cards — for spending on purchases they have to make every month without paying interest. Plus, making regular, on-time payments can help build your credit profile.
When Should You Not Use a Credit Card to Pay Bills?
As great as the potential to earn rewards is, if someone can’t afford to pay their credit card balance, charging their bills can lead to high interest charges and late fees (which are two ways credit card companies make money). High-interest credit cards have an average APR of about 20%–25%, and credit card interest typically compounds daily using a daily interest rate, all of which means debt can build up quickly when balances are carried.
It also might not make sense to pay bills with a credit card if it leads to paying an extra fee from the merchant.
đź’ˇ Quick Tip: Credit card interest caps have become a hot topic, as the total U.S. credit card balance continues to rise. Balances on high-interest credit cards can be carried for years with no principal reduction. A SoFi personal loan for credit card debt may significantly reduce your timeline, however, and could save you money in interest payments.
What Bills Can You Pay With a Credit Card?
There are limitations on which bills you can pay with a credit card. And, as mentioned, you may owe a fee for using a credit card to pay bills, which could outweigh the benefits earned.
Here are nine examples of bills you may be able to pay with a credit card, as well as explanations on how paying these bills with a credit card works.
1. Streaming Services
Streaming services typically accept credit card payments to cover the monthly cost of the subscription. Paying for a streaming service with a credit card typically involves logging into your account, navigating to the “Account” or “Billing” section, and selecting “Add/Update Credit Card” to input your card details. The card will then automatically get charged each month unless you cancel or suspend your membership.
Streaming services generally do not charge an extra fee if you choose to pay your bill by credit card.
2. Utilities
Some utilities providers allow credit card payments, so it’s worth investigating this option to determine if it’s accepted. If your utility provider will take a credit card payment, then setting it up is usually as simple as providing your credit card number when you pay your bill online, over the phone, or through the mail. You can often set up autopay as well.
However, watch out for the additional convenience and processing fees that some providers may charge. Higher bills are more likely to offset this fee given the greater earning potential for credit card points or other rewards.
3. Cable
Cable is another bill you can typically pay with a credit card. To determine how to do so, you’ll want to consult your cable provider. You may be able to enter your credit card number on the online payment portal or provide this information over the phone. Setting up autopay is also usually an option with a credit card.
There is typically no additional processing fee to pay cable bills.
4. Phone
Another bill you might be able to pay with your credit card is your cell phone bill. You can likely set this up online on your provider’s website or by giving them a call. If you’re unsure of how to pay bills with a credit card, simply consult your plan provider.
You’ll typically face no additional processing fees.
5. Internet
Your internet service is another bill that you can often cover using your credit card. As with other utilities and services, consult your internet provider if you need assistance getting this set up. In general, however, you can do so through your online payment portal. If you don’t want to go through the legwork each month, you can usually set up autopay with your credit card.
Internet providers typically won’t charge an additional processing fee to pay your bill with a credit card, meaning those costs won’t cut into any rewards you earn with a cash back credit card or other type of rewards credit card.
6. Rent
Landlords typically don’t allow credit card payments, but there are third-party solutions that allow you to pay your rent with a credit card. This includes services such as Plastiq and PlacePay, which act as intermediaries.
However, you’ll generally pay a convenience charge or other fees. You’ll want to assess whether the benefits of using your credit card to pay rent outweigh the costs.
7. Mortgage
Mortgage servicers generally don’t allow credit card payments. However, there are third-party payment processing services through which you could pay your mortgage. Still, some credit card issuers may prohibit you from paying your mortgage through these services.
In addition to restrictions, you’ll want to look out for processing fees. These could cancel out any rewards you could earn from covering your mortgage with a credit card.
8. Taxes
It is possible to pay some taxes with a credit card. The IRS allows you to pay on its website using a credit card. However, you’ll face a processing fee ranging from 1.75% to 1.85%, depending on which payment processor you select. If you opt to file and pay using third-party tax software, your fee could be even higher.
9. Medical Bills
While you can pay medical bills with a credit card, it might not be the most cost-effective option. Many medical providers may offer interest-free or low-interest payment plans, or a personal loan could offer a lower rate than a credit card.
If you do think the rewards and convenience of using a credit card is worth the risk, the process of paying bills with a credit card will vary by medical institution. Before charging your medical bills to a credit card, you may want to at least try to negotiate medical bills down.
Recommended: Does Applying For a Credit Card Hurt Your Credit Score?
Benefits of Paying Bills With a Credit Card
There are a few key benefits associated with paying bills with a credit card.
1. Ease of Payment
It may be possible to pay a bill with a credit card online, in an app, or over the phone.
2. Easy to Prove Payment
If a payment dispute arises, paying by credit card is an easy way to keep a record of payments.
3. Fraud Protection
Paying bills with a credit card offers stronger fraud protection than using a debit card or a direct bank transfer. If you spot a suspicious charge, the issuer will typically remove it from your statement and investigate the claim on your behalf, so you don’t have to pay for it while the issue is resolved.
4. Autopay
It’s easy to use a credit card to set up autopay for bills so you never accidentally forget to pay them.
5. Can Build Credit History
Given how credit cards work, using a credit card to make payments and then paying that balance off on time and in full can help you build your credit.
6. Earn Rewards
Paying your bills with a credit card can help you earn cash-back rewards and credit card points.
Downsides of Paying Bills With a Credit Card
There are also some downsides to paying bills with a credit card that are worth keeping in mind.
1. May Cost More
Because many bill services charge fees to pay with a credit card, it’s possible to spend more than necessary on processing fees.
2. Can Lead to High-Interest Debt
If you can’t afford to pay off your credit card balance after using it to pay for bills, you can end up with high-interest debt on your hands. As mentioned, debt can accrue quickly on credit cards with high, compounding interest rates, and it’s unfortunately not an uncommon situation to be in. In the United States, the total credit card balance recently rose to $1.23 trillion.
In fact, credit card interest caps have become a hot topic, including a proposal for a temporary 10% cap on credit card interest rates. While opinions are divided on interest rate caps, one increasingly popular option is applying for a personal loan. Personal loans interest rates average 10-12%, compared to 20%-25% for credit cards, and they have predictable, fixed terms.
3. Processing Fees Can Cancel Out Rewards
It’s important to do the math to make sure that the cost of processing fees isn’t canceling out the cash back you’re earning with the purchase.
4. Leads to Another Bill to Pay
Similar to when you pay a credit card with another credit card, paying a bill with a credit card simply leads to another bill to pay. This can cause more hassle than it’s worth.
5. Can Hurt Credit Utilization Ratio
Carrying a higher balance on a credit card can lead to a higher credit utilization ratio, which can be damaging to your credit. One common credit card rule of thumb is to keep your utilization below 30%, meaning you’re not using more than this percentage of your total available credit at any given time.
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Guide to Using a Credit Card to Pay Bills
At this point, it’s clear that it is possible to pay some bills with a credit card. But should you? In short, it depends.
If the bill provider won’t charge a processing fee and you can afford to pay off your credit card balance in full, then paying bills with a credit card can be a great way to earn rewards and potentially build credit.
However, in many cases, the processing fee some merchants charge can outweigh the value of cash back or other rewards earned. And carrying a credit card balance can lead to incurring expensive interest and fees.
The Takeaway
The decision to pay bills with a credit card hinges on two main factors: whether the provider charges a processing fee and your ability to pay the full credit card balance on time. If you can avoid fees and pay your statement in full, using a credit card for bills can be a smart way to earn rewards and build credit. However, high processing fees or carrying a balance that accrues high-interest debt can quickly negate any potential benefits.
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FAQ
Should I put non-debt bills on a credit card?
Paying non-debt bills like streaming, cable, phone, and internet with a credit card can be a smart move, if the provider doesn’t charge a processing fee and you can afford to pay the credit card balance in full each month.
When done responsibly, you can earn credit card rewards (like cash back or points) and potentially build your credit history without accruing high-interest debt. However, you should avoid using a credit card for bills that incur high processing fees or if you are unable to pay off the balance on time and in full.
Is it wise to pay monthly bills with a credit card?
Generally, paying monthly bills with a credit card can be wise if you can consistently pay the full credit card balance on time. This approach allows you to earn rewards, such as cash back or points, and can help build a positive credit history. However, it is not wise if the bill charges a processing fee that cancels out the rewards, or if you anticipate carrying a balance, which can lead to high-interest debt.
Is it better to pay bills with a credit or debit card?
Paying bills with a credit card is generally better than using a debit card because credit cards generally offer more robust fraud protection. Additionally, using a credit card responsibly can help you earn rewards and build your credit history, benefits a debit card does not offer.
Should I pay off my credit card in full or leave a small balance?
Paying off your credit card in full each month is the wisest financial move. This allows you to avoid interest charges, as credit cards typically offer a grace period between the statement date and the due date. By paying the entire balance, you can save money, maintain a good credit utilization ratio (which can positively impact your credit), and enjoy any earned rewards without the cost of high-interest debt. Leaving a small balance is unnecessary and only results in paying interest.
What happens if you pay the full amount on your credit card?
When you pay your entire statement balance by the due date every month, you benefit from a grace period. This is the window between the end of a billing cycle and the payment due date during which the issuer does not charge interest on new purchases. This means you are effectively using the card interest-free, maximizing any rewards earned, and maintaining a healthy credit utilization ratio, which can positively impact your credit.
Does paying a bill with a credit card count as a purchase?
Yes, paying a bill with a credit card typically counts as a purchase. This means the transaction will be subject to the card’s terms, including earning rewards like cash back or points, and contributing to your credit utilization.
About the author
Jacqueline DeMarco
Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.
Photo credit: iStock/Damir Khabirov
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