Using a credit card to make a purchase can be a great way to earn rewards like cash back and travel points. Because of these rewards, it can feel tempting to use a credit card for every possible purchase. This raises the question: Can you pay bills with a credit card?
In fact, it is possible to pay bills with a credit card. Keep reading to learn what bills you can pay with a credit card and how using a credit card to pay bills works.
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 boost your credit score.
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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).
It also might not make sense to pay bills with a credit card if it leads to paying an extra fee from the merchant (we’ll talk more about how this happens shortly).
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What Bills Can You Pay With a Credit Card?
There are limitations on which bills you can pay with a credit card. And, as briefly noted earlier, you may owe a fee for using a credit card to pay bills, which could outweigh the benefits earned.
Here are 10 examples of bills you can pay with a credit card, as well as explanations on how paying these bills with a credit card works.
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1. Streaming Services
About 95% of streaming services accept credit card payments to cover the monthly cost of the subscription. To pay this bill with a credit card, all you’ll need to do is enter their credit card number on the streaming service’s website. The card will then automatically get charged each month unless you cancel or suspend your membership.
It’s unlikely any streaming service will charge an extra fee for using a credit card to pay for their subscription.
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.
Cable is another bill you can 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.
Another bill you might pay with your credit card is your phone bill. You can likely set this up online on your phone 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 phone provider.
You’ll typically face no additional processing fees.
Your internet service is another bill that you can 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.
Most internet providers 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 card.
Most landlords don’t allow credit card payments, but there are third-party solutions that can allow someone to pay their 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.
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. Car Loan
Just like mortgage services, most auto lenders also don’t accept credit cards for loan payments. If you do find an auto lender who’s willing to accept a credit card for payment, you’ll likely face a hefty processing fee.
Additionally, credit card interest rates tend to be higher than those of auto loans, so if you’re not confident you could immediately pay off your credit card balance in full, you could simply end up paying a lot more in interest.
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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 1.87% to 1.98% depending on which payment processor you select. If you opt to pay using an integrated IRS e-file and e-pay service provider, such as TurboTax, your fee could range even higher.
10. Medical Bills
While you can pay medical bills with a credit card, it might not be the most cost-effective option. This is because credit cards can charge high interest and fees, and there’s the potential to damage your credit score. 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.
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’s possible to pay a bill with a credit card online 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 paper trail of payments.
3. Identity Theft Protection
If either a credit card or someone’s personal information gets stolen, a credit card issuer will pay back some or all of the charges.
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 build your credit score.
6. Earn Rewards
Purchases made with a credit card helps earn cash back 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 someone can’t afford to pay off their credit card balance after using it to pay for bills, they can end up with high-interest debt on their hands.
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 is damaging to credit scores. One of the common credit card rules 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. The more important question now is not can I pay bills with a credit card, but should you pay bills with a credit card? In short, it depends.
If the bill provider won’t charge a processing fee and the consumer can afford to pay off their credit card balance in full, then paying their bills with a credit card is a great way to earn rewards and build a credit score.
However, in many cases, the processing fee some merchants charge can outweigh the value of cash back or other rewards earned. Not to mention, carrying a credit card balance can lead to incurring expensive interest and fees.
It is possible to pay some bills with a credit card, but doing so can lead to paying costly processing fees or even accruing interest charges. It’s important to crunch the numbers to see if paying a bill with a credit will result in earning enough rewards to justify any processing fees.
Want to earn more rewards for your everyday purchases? With the SoFi Credit Card, you can earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back when redeemed for a statement credit.1
Should I put non-debt bills on a credit card?
If someone can afford to pay off their credit card balance in full and the processing fee they’ll owe isn’t, it can make sense to put a non-debt bill on their credit card. They just have to remember to then pay their credit card bill to avoid owing any fees or interest, which could undercut the potential benefits.
Is it wise to pay monthly bills with a credit card?
Paying monthly bills with a credit card can lead to processing fees in some scenarios. If someone won’t owe a fee, they can benefit from earning cash back by paying their bills with a credit card. This can be a savvy move to make if they can afford to pay off their credit card bill in full each month, thus avoiding interest charges.
Is it better to pay bills with a credit or debit card?
Paying a bill with a credit card can lead to earning rewards, which a debit card can’t offer. However, if you’re worried about handling credit card debt responsibly, you may opt for using a debit card, as this will draw on money you already have in your bank account. With either a debit or credit card, however, you’ll want to look out for fees.
Should I pay off my credit card in full or leave a small balance?
It’s always best to pay off a credit card balance in full if possible before a credit card’s grace period ends. The grace period is the time between when the billing cycle ends and your payment becomes due. You won’t owe interest as long as you pay off your balance in full before the statement due date. Otherwise, you could owe interest charges and fees.
What happens if you pay the full amount on your credit card?
Paying the full amount on a credit card makes it possible to avoid paying interest. After a credit card is paid off in full, the consumer can simply enjoy the rewards they earned by making purchases with their credit card. However, having a $0 balance doesn’t necessarily boost your credit score.
Does paying a bill with a credit card count as a purchase?
Yes, paying a bill with a credit card does count as a purchase. This makes it possible to earn cardholder rewards like cash back when paying bills.
Photo credit: iStock/Damir Khabirov
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