How to Make an ACH Payment With a Credit Card

An Automated Clearing House (ACH) payment is an electronic transfer of funds directly between bank accounts via the Nacha network. This system facilitates transactions like direct deposits and bill payments, offering a cost-effective and secure method without paper checks or wire transfers. In contrast, a credit card allows individuals to borrow funds up to a predetermined limit from a financial institution to make purchases. Credit card transactions are processed through distinct card networks, offering immediate authorization and the potential to earn rewards like points or cashback.

The Indirect Process

Directly making an ACH payment with a credit card is not possible due to fundamental differences in how these two payment systems operate. ACH transactions move funds directly between bank accounts within the Nacha network. They process payments in batches, typically taking one to three business days to settle, and are known for lower costs and high security.

Credit card transactions, conversely, rely on card networks such as Visa, Mastercard, or Discover, which are entirely separate from the ACH network. When a credit card is used, the transaction involves an authorization process where the card network verifies available credit, guaranteeing funds to the merchant. This system is designed for immediate point-of-sale or online purchases requiring real-time approval.

A direct bridge between these two systems does not exist because ACH payments require bank account and routing numbers, while credit card payments use card numbers and their associated networks. Therefore, an intermediary service is necessary to facilitate a payment that originates from a credit card but needs to arrive as an ACH transfer. This indirect approach is the only way to leverage a credit card for obligations typically paid via ACH, such as rent, utilities, or loan payments.

Methods for Paying ACH with a Credit Card

Third-party services and platforms enable converting credit card payments into ACH transfers for obligations not directly accepting credit cards. These services typically operate by accepting your credit card payment and then initiating an electronic bank transfer or even mailing a physical check to the payee on your behalf.

The process generally begins with creating an account on the chosen platform and linking your credit card, providing the necessary card details such as the card number, expiration date, and security code. Once your credit card is linked, you will provide the recipient’s payment details, which are usually their bank account and routing numbers for an ACH transfer, or their mailing address if the service sends a check.

For instance, services like Plastiq allow users to pay a wide range of bills, including rent, tuition, and utilities, using a credit card. After you initiate the payment, Plastiq processes the credit card charge and then sends the funds to your payee via their preferred method, which can be an ACH transfer, wire transfer, or a physical check.

Some online bill payment services, including certain features offered by PayPal, also facilitate credit card to ACH payments. PayPal Bill Pay, for example, has allowed users to pay specific billers, like utility companies or property tax entities, directly with a linked credit card, often without an additional fee. To use such a service, you would typically navigate to the bill pay section within the platform, search for your specific biller, and then select your linked credit card as the payment method. It is important to confirm that your specific biller is supported by the platform, as not all payees are available through every service.

This includes specifying the payment amount, selecting the credit card to be charged, and inputting the recipient’s banking information or confirming their established payment details. Some platforms may also offer options for scheduling one-time payments or setting up recurring payments for regular bills. The platform typically provides a confirmation or tracking feature to monitor the payment’s progress until it is successfully delivered to the recipient.

Important Considerations

When using a credit card to make an ACH payment, understanding the associated fees is important. Most third-party services charge a fee for this convenience, typically ranging from 2.5% to 2.9% of the transaction amount. For example, Plastiq generally charges a 2.9% processing fee for credit card payments. While PayPal Bill Pay might offer fee-free options for certain billers, standard credit card transfers through PayPal can incur a fee of around 2.9% plus a fixed amount.

Processing times are another consideration, as these payments are not instantaneous. While credit card transactions offer immediate authorization, the subsequent ACH transfer initiated by the third-party service usually takes one to three business days to settle. If the service sends a physical check, delivery can take even longer, typically five to seven business days. Planning ahead and initiating payments well before their due dates is important to avoid late fees.

Payment limits may also apply, both from the credit card issuer and the third-party service. Your credit card will have a credit limit, and some services or issuers might impose their own daily, weekly, or monthly limits on the amounts that can be paid via credit card. While the ACH network itself has a per-transaction limit of up to $1 million for same-day payments, individual financial institutions and intermediary services often set lower limits based on account type and risk assessment.

The types of payments supported can vary by service. While common bills like rent, mortgage, utilities, and tuition are often supported, some services may restrict payments for certain categories, such as loan payments, taxes, or payments to individuals. Checking the service’s terms and conditions or contacting their support is advisable to ensure your specific payment type is permissible.

The distinction between a “purchase” and a “cash advance” is important, as cash advances often incur higher interest rates and immediate fees, with no grace period. Ensuring the transaction is coded as a purchase by the credit card issuer, rather than a cash advance, is important to earn rewards and avoid additional costs.