Can I Pay Bills With Zip? How It Works & What to Know

Zip, a “buy now, pay later” (BNPL) service, offers consumers a flexible way to manage purchases by splitting costs into manageable installments. This article explains how Zip can be used for paying bills, detailing the process and outlining associated financial considerations.

Understanding Zip for Bill Payments

Zip can be used to pay a variety of bills, allowing users to spread out expenses rather than paying the full amount upfront. This functionality operates through the Zip app, often by generating a virtual card or facilitating payments directly to billers. The ability to pay a bill with Zip relies on the biller accepting card payments, as Zip acts as an intermediary.

Many common household expenses are supported, including utilities like electric, gas, internet, and cable TV. Subscriptions, rent, and even credit card bills can often be paid. Zip may also be used for larger or unexpected bills such as car registration, tax bills, or school fees. However, categories like gift cards are typically excluded.

The Process of Paying Bills with Zip

Paying bills through the Zip app involves a straightforward process. Users open the Zip application and navigate to the payment section, where they can find an option to pay a bill, often by generating a virtual card.

To complete the payment, users enter the biller’s details, including the account number, payee’s name, and the exact bill amount. If a virtual card is generated, its details (card number, expiration date, CVV) are used on the biller’s own payment portal. After confirming details within the Zip app, Zip processes the transaction. While the user’s Zip account is debited instantly, allow up to five business days for the biller to receive the payment.

Costs and Financial Considerations

Using Zip for bill payments involves various financial aspects. While Zip Pay purchases are interest-free, a monthly account fee of $9.95 may apply if there is an outstanding balance. Some Zip products, like Zip Money, may have a flat payment processing fee of $2.50 per bill and can incur interest, often around 25.9% per annum, after an initial interest-free period.

Repayment schedules commonly involve four installments spread over six weeks, with the first payment often due at the time of the initial transaction. Should a payment be missed, late fees are applied. For instance, a late fee of $7.50 for Zip Pay or $15 for Zip Plus and Zip Money may be charged if the minimum repayment is not made seven days after its due date. Additionally, a dishonor fee of $5 can be assessed if a scheduled repayment is rejected by the user’s bank.

The impact of using Zip on a consumer’s credit score can vary. Zip performs a credit check upon application. Responsible usage with timely payments can contribute positively to a payment history. However, consistently missing payments can negatively affect one’s credit score, as late payments may be reported to credit bureaus and could even lead to debt collection activity.