When You Can Pay Your Bills With a Credit Card (and When You Can’t)
If you live in fear of accumulating debt , you may be hesitant to pay any bills with a credit card. While you should, if at all possible, avoid credit card billing when you cannot afford to pay, you have the option of paying most bills with a credit card. With the right strategy, using your card to pay your bills can earn you big rewards and points. Here’s what you need to know about when it makes sense to pay your bills with a credit card and why it might be too risky for some.
Which bills are safe to pay with a credit card?
Powerful credit card users have many reasons to put their bills on a card:
- Earn rewards or points
- Automate payments to save time (and never miss a payment)
- Track all your bills in one statement
- Buy yourself time to pay
Here are the most convenient account types to consider linking to your credit card to earn more points:
- Public utilities
- Subscription Services
- Fitness membership
- Cable and internet
- Cellular telephone
- Car insurance
- medical bills
Here’s the thing: It’s only worth paying your monthly bills with a credit card only when you’re sure you’ll pay your balance in full and on time each month.
If that’s not certain, consider the risks involved in using a credit card for your bills.
Reasons not to use a credit card to pay bills
The rewards of a credit card are not always worth the risks of using credit to pay monthly bills.
Loss due to additional commissions
Processing, maintenance, hidden fees—whatever you want to call them, they’re insidious and full of bullshit .
There are many bills that you can technically pay with a credit card, such as taxes or mortgage payments, but they almost always come with a convenience or third party fee. These fees will almost always be between two and three percent of the amount paid, and this cost outweighs any credit card rewards you might earn.
Building interest
As we mentioned above, using a credit card only makes sense for those who are 100% sure that they can top up their balance in full every month. Otherwise, the risk of accruing interest is high.
Damage to your credit history
When you put your bills on your credit card, you are likely to increase your credit usage. If the cost of your bills takes your utilization rate through the roof ( or more than 30% ), the subsequent hit to your credit score isn’t worth it.
Debt accumulation
This is the main and most obvious reason to avoid using a credit card to pay your bills. While a credit card can buy you some time, the importance of paying off your balance every month cannot be overemphasized. Getting into debt is a far greater risk than any potential reward of a few credit card points.
If you’re interested in placing your accounts on a card, you’ll want to check which cards offer the most bang for your buck. We recommend reviewing the best NerdWallet credit cards for recurring payments here .