Should I be paying bills with a credit card?

Credit cards can be a handy way to make regular bill payments and gain extra benefits, like rewards and credit-building opportunities.

Most companies offer a range of options for paying your bills, such as by cash, check or directly from your bank account. Each have their pros and cons, but credit cards – unique among those payment options – allow you to pay directly by taking on debt. That adds a new layer of considerations into the mix; some good, some bad. 

In general, it’s not a bad idea to pay your bills with credit cards, assuming you have a good handle on how to manage it. But there are times when it doesn’t make sense to use a credit card for bills, and it may not be an option at all with some types of bills.

• Is it a good idea to pay bills with a credit card?
• What should you consider before paying a bill with a credit card?
• How does paying a bill with a credit card work?
• FAQs about paying bills with credit cards

Is it a good idea to pay bills with a credit card?

It can be a good idea to pay certain bills, like your utilities and subscriptions, with a credit card as long as you can maintain good financial habits, like always paying on time and keeping your balances low relative to your credit limit.

Paying bills with a credit card offers several advantages over other payment methods, including:

• Payment ease: Pay your bills online or over the phone, without even leaving your home.
• Credit building: Regularly using your credit card to pay bills can help you build credit, but only if you pay your credit card on time and keep your balances low. 
• Extra time to pay: Companies usually set the due date for your bills a few weeks into the future. That, combined with the 20 to 25-day grace period on your credit card, can offer a small buffer to gather funds if you’re short between paychecks.
• Rewards and points: A major advantage of using credit cards is the ability to earn points or cash back on your spending. Some credit cards even offer extra rewards and credits for some bill types, such as streaming services. 
• Record of payments: Unlike paying with cash, you can easily show proof of payment using your credit card statement if there’s ever a dispute. 
• Automatic payments: Businesses that accept credit card payments often allow you to set up autopay so you never have to remember to pay a bill again. You can also put the credit card bill itself on autopay, too, drawing funds from your bank account.
• Extra consumer protections: Credit cards have more protections against fraudulent charges. You’re less likely to lose your money if your card is lost or stolen. 

Not all bills are created equal, though. You generally can’t pay certain bill types with a credit card. And even if you can, it sometimes doesn’t make sense to do so, depending on your goals.

What bills should I pay with a credit card?

It’s easy to set up many smaller household bills on autopay, making them a perfect candidate for paying with your credit card. These bills often include:

• Insurance premiums (car, home, renters, etc.)
• Utilities (electricity, internet, telephone, gas, water, etc.)
• Memberships and subscriptions (including streaming services)

What bills should I not pay with a credit card?

It’s less common to pay larger bills with a credit card, especially since these are often already debt-based themselves:

• Rent
• Taxes
• Mortgage
• Auto loans
• Student loans

Often, you won’t even have the option of paying these types of bills with a credit card. If you do, chances are your lender will charge an extra fee for paying with a credit card, or you’ll be steered to a third-party payment option, which will charge its own fee, too. You can expect to pay a percentage-based processing or convenience fee for these types of credit card payments.

And because these are rather large payments to begin with, the corresponding fee amounts can be very expensive, too. If your landlord charges a 3% fee on a $2,000 rent payment, for example, that’s effectively tacking on an extra $60 that you could avoid by paying another way, such as a direct bank payment.

What should you consider before paying a bill with a credit card?

• Convenience fees: It’s often not worth paying bills with a credit card if it’ll charge you an extra fee, especially if you’re looking to earn rewards. Paying a 3% fee to earn 1% cash back still means you’re basically adding an extra 2% to your bill amount. 
• Medical debt protections: Medical debt doesn’t impact your credit as harshly as other types of debt, but you lose that protection if you pay it off with a credit card. It’s often better and easier to work out a payment plan directly with the healthcare billing office.
• Credit card management style: Experts caution against allowing charges to pile up on your credit card, since that’s an easy way to become overburdened by debt. Instead, it’s best to plan on paying off your card in full each month, which also helps you avoid paying interest.

Does paying a bill with a credit card hurt your credit?

Paying bills with a credit card can help or hurt your credit, depending on how that bill payment stacks up with your other charges and how you manage your credit card payment.

If you keep a habit of always paying off your credit card balance in full each month, chances are it’ll help you build stronger credit over time. But if you make late credit card payments or carry a balance from month to month – especially if that balance keeps growing, relative to your credit limit – it could end up hurting you in the long run.

How does paying a bill with a credit card work?

If a creditor allows you to pay your bill with a credit card, they usually make the process very easy. Here’s how it works, along with a few points to keep in mind: 

1. Check payment options: Contact your creditor to see if they even accept credit card payments. You can often find this information in your online account.
2. Read the fine print: Look for credit card processing fees or any other rules that apply when you pay by credit card.
3. Consider setting bills on autopay: Most creditors that accept credit card payments will gladly offer the option for autopay, too. It’s not required, but it can help you avoid missed payments and help you build strong credit.
4. Consider setting your credit card on autopay: You’ve set your bill up on autopay to charge your credit card, and it’s wise to do the same with your credit card itself, too. You can do this in your credit card account, or even through the online bill payment service offered by many banks.

How to keep track of your bills

The single best thing you can do to build strong credit is to pay your bills on time, every time. But that can be tough to do in modern life, especially for bills that fluctuate or aren’t charged every month. Here are some tips that other people find helpful in keeping track of bills:

• Sign up for autopay and account alerts on all of your bills.
• Check your credit reports to see who’s reporting account information, and that it’s accurate.
• Write bill due dates on calendars that you regularly look at, whether on your fridge or on your computer. 
• Find a budgeting style that works for you, so that you always have enough left over to pay your bills.
• Consider a debt management plan from a nonprofit credit counseling agency, which can help combine your payments into an easier-to-manage program.

Next steps

Setting up bills on autopay via your credit card is one of the best ways to build credit long-term, but only if you can consistently show strong management skills. A missed credit card payment hits your credit reports just the same as a missed bill payment and can potentially lead to other problems, like accumulating too much credit card debt. 

So, before you start paying off your bills regularly with your credit card, it’s best to come up with a plan for how to manage it. Here are some key points to think about:

• Which bills can you pay using credit cards?
• Do you have enough available credit to pay your bills?
• How will you ensure you always pay your credit card on time, and in full?
• Do any of your credit cards offer extra rewards for certain bill payments or expenses?
• If you can’t pay your credit card off in full each month, how will you ensure your balance doesn’t grow?