What Bills Can You Pay With a Credit Card?

Paying household and personal expenses is a regular part of financial management. Credit cards offer a convenient option for settling a variety of bills, providing flexibility in managing finances. While credit cards can streamline the payment process for many expenditures, not all billers accept this payment method, and some transactions may involve additional costs.

Common Bills You Can Pay

Many routine household bills can be settled using a credit card. Utility providers, including those for electricity, gas, and water, frequently accept credit card payments, although a convenience fee may apply. Internet, cable, and phone service providers commonly allow credit card payments, often without charging a fee. This makes them suitable for setting up automatic payments.

Insurance premiums for auto, home, and health policies are generally payable by credit card directly through the insurer’s online portals or over the phone. While many insurers do not impose charges, verify any processing fees. Streaming services and subscription boxes also typically accept credit cards for recurring charges, often without convenience fees.

Paying taxes with a credit card is possible for federal, state, and local obligations. However, government entities typically do not directly process these payments, relying on third-party payment processors that charge a convenience fee. These fees usually range from 1.87% to 2.35% for federal taxes and can be around 2.39% for property taxes.

Rent and mortgage payments are less commonly accepted directly by landlords or lenders via credit card due to processing costs. Nevertheless, third-party services can facilitate these payments, typically imposing a fee ranging from 2% to 3% of the transaction amount. Confirm with the landlord or property manager if they accept credit card payments, directly or through a specific service.

How to Pay Bills with a Credit Card

Paying bills with a credit card involves straightforward methods. Many billers provide online payment portals where card details can be entered directly. This direct approach is common for services like utilities, internet, and phone bills, and often allows for setting up recurring payments to ensure bills are paid on time. Some companies also accept credit card payments over the phone, by providing card information to a customer service representative.

When a biller does not directly accept credit card payments, or if you prefer a consolidated approach, third-party payment services are available. Services such as Plastiq act as intermediaries, allowing you to pay almost any bill with a credit card. You pay the third-party service with your credit card, and they then remit payment to the biller via check or electronic transfer.

These third-party services typically charge a processing fee for their convenience. For example, Plastiq generally charges a fee ranging from 2.85% to 2.9% for credit card payments. While this enables payment flexibility, factor these additional costs into your financial planning.

Key Factors to Consider When Paying Bills

Consider certain financial factors before using a credit card for bill payments. Convenience fees, often ranging from 1% to 4% of the transaction amount, are frequently imposed by billers or third-party processors to cover their costs. These fees can quickly negate any potential benefits from credit card rewards programs. Calculate whether the value of earned rewards, such as cash back, points, or miles, outweighs the cost of these fees.

Credit card rewards are substantial, especially for cards with elevated earnings in specific spending categories or sign-up bonuses. If a credit card offers a high rewards rate that exceeds the convenience fee, paying a bill with the card could be advantageous. For instance, if a card offers 3% cash back and the fee is 2%, a net gain of 1% is realized. However, many general purchases earn 1% to 1.5% cash back, which may not cover typical convenience fees.

Paying the full credit card statement balance by the due date each month avoids incurring interest charges. Credit card interest rates can be high, often exceeding 20%, and carrying a balance quickly diminishes any value gained from rewards or convenience. Most credit cards offer a grace period, allowing purchases to be paid off without interest if the entire statement balance is settled by the due date.

The impact on your credit utilization ratio is another important consideration. This ratio compares credit used to total available credit. A lower utilization ratio, generally below 30%, is viewed favorably by credit scoring models and positively influences your credit score. Paying large bills with a credit card, especially if it leads to a high balance, may temporarily increase this ratio and affect your credit score.