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Using credit cards to pay regular bills can seem like an attractive way to rack up rewards or extend payment periods. But is it the right move? Let’s dive into the details and explore when it’s beneficial to pay your bills with credit cards and when to stick to other payment methods.
Using a credit card to pay monthly expenses can boost your reward points or cash-back benefits, but is it the best option? There are circumstances where paying bills with a credit card can be advantageous or even necessary, but in some cases, it might not be worth potential downsides.
Not all bills are the same, so you’ll need to analyze each one individually to determine if it’s worth putting on your credit card. Before doing so, here’s a breakdown of the pros and cons associated with paying bills using credit.
Paying Bills with Credit Cards: The Pros and Cons
Using a credit card to pay bills can be a strategic way to manage your finances, but it’s important to weigh the benefits and potential drawbacks before committing to this approach. Let’s explore the pros and cons of using credit cards for paying bills.
Pros of paying bills with credit cards
✅ 1. Earn rewards or points
One of the biggest perks of using a credit card for bills is the ability to collect rewards points, miles, or cash back, depending on your card’s offerings.
✅ 2. Extended payment periods
Using a credit card can provide extra time to make payments, as you won’t owe the money until your next statement is due.
✅ 3. Convenience
Paying bills with a credit card can eliminate the need for check writing or dealing with cash, making the process more convenient. Credit cards also make it easy to set up automatic payments for recurring bills, ensuring you never miss a due date.
✅ 4. Budget Management
With everything appearing on your credit card statement, it can simplify tracking expenses. It’s especially helpful if you’re budgeting or need to organize finances for tax purposes.
✅ 5. Meeting sign-up bonus criteria
Many credit cards offer lucrative sign-up bonuses, but you need to spend a certain amount within a limited time frame. Using your credit card to pay bills can help you meet those requirements much faster.
✅ 6. Build Credit
Regular, on-time credit card payments can help build your credit score. By paying bills with your card and paying off the balance in full each month, you can boost your credit history.
✅ 7. Fraud Protection
Credit cards generally offer more protection against fraud compared to debit cards or direct bank transfers. This can be especially valuable when making payments online.
Cons of Paying Bills with Credit Cards
❌ 1. Potential fees
Some companies impose extra fees for processing credit card payments. You’ll want to ensure that these fees don’t outweigh the rewards you’re earning.
❌ 2. Risk of debt accumulation
If you’re not careful, using a credit card for bills can lead to overspending, especially if you’re unable to pay off your balance in full each month.
❌ 3. Interest charges
If you don’t pay off your credit card balance in full by the due date, you’ll incur interest on the remaining balance, which could negate the rewards you’re earning.
❌ 4. Higher credit utilization
By charging bills to your credit card, you’re increasing your credit utilization, which is the ratio of your credit card balance to your credit limit. High credit utilization can negatively impact your credit score.
General advice for paying bills with a credit card
In most cases, using a credit card to pay bills is beneficial, provided you follow two important guidelines:
Pay off the balance in full
You should aim to pay your full statement balance on time every month to avoid interest charges. Only paying minimums can lead to mounting debt and financial strain.
Don’t become over reliant on credit for bills you can’t afford
If you’re struggling to pay bills, using a credit card might offer short-term relief. However, consistently relying on credit for bills you can’t afford will result in high-interest debt that can be difficult to manage and pay off.
If it has become a monthly habit you need to evaluate your budget and see where you can cut down on expenses, or figure out how to increase your income.
On the other hand, if you have a solid handle on your finances and can pay off your balance each month, charging your regular bills can have a number of advantages.
Splitting bills across multiple credit cards
The payment service Kasheesh offers a unique solution for those wanting to pay their bills using credit cards while avoiding some of the pitfalls mentioned above. With Kasheesh, you can split bill payments across multiple credit cards, allowing you to:
- ✅ Afford paying your bills on time even when you don’t have enough credit or funds available to cover the entire bill with one credit or debit card.
- ✅ Avoid maxing out a single credit card and keep your credit utilization low
- ✅ Combine credit and debit cards to minimize debt and interest fees–by charging only the portion you really need to finance to your credit card.
- ✅ Since Kasheesh works by combining your chosen credit cards into a digital Mastercard debit card, it effectively bypasses the higher credit card processing fees while still allowing you to use your credit cards as the underlying payment. (Debit card fees are typically much lower)
By managing your bill payments more strategically with Kasheesh, you can take advantage of the benefits of using credit cards without facing the downsides.
What types of bills can you pay with a credit card?
Let’s examine which bills can typically be paid with a credit card and which ones might come with extra fees.
Mortgage payments
For most homeowners, mortgage payments represent the largest monthly expense. Given this, paying your mortgage with a credit card seems like a smart way to rack up rewards or meet the spending requirement for a sign-up bonus.
Unfortunately, most mortgage lenders don’t accept credit card payments directly. They avoid the high processing fees that come with credit card transactions.
If you do manage to find a mortgage lender that accepts credit card payments, you may be charged a convenience fee. In many cases, this fee outweighs the benefits of earning rewards points.
Rent
Renters might also face difficulties when trying to pay with a credit card. While some landlords accept credit card payments, most smaller landlords or property managers still prefer cash, checks, or direct transfers.
However, if you rent from a large company or property management group that does accept card payments, it can definitely be worth using a credit card to pay rent and reap the rewards.
In many circumstances the processing fee for using a credit card is higher than when using a debit card, but by using the service Kasheesh you can effectively bypass those higher credit card fees and even split your rent across multiple cards.
If your landlord doesn’t accept credit cards, services like Plastiq or credit card portals with rent payment options may be an alternative. Keep in mind that these options typically come with processing fees, so you’ll need to evaluate whether the cost is worth the rewards.
Struggling to pay rent? Also consider:
Auto payments
Much like mortgage lenders, car loan providers generally don’t allow credit card payments. They, too, want to avoid credit card processing fees.
However, if you’re determined to use a credit card for your car payment, there’s a potential workaround — balance transfers. Some credit cards offer 0% introductory APR on balance transfers, allowing you to transfer your car loan balance to a credit card temporarily.
While this could save you interest in the short term, you need to pay off the transferred balance before the introductory period ends. Otherwise, you’ll be hit with high-interest charges, often much higher than those on a typical car loan.
Moreover, balance transfers can negatively impact your credit score by increasing your credit utilization. And, depending on the card, you may also face a balance transfer fee.
Insurance premiums
Many auto and home insurance companies allow you to pay premiums by credit card. However, you should check with your provider to confirm whether there are any associated fees.
Some insurers won’t charge a fee for credit card payments, while others only waive the fee if you pay your entire premium upfront rather than in monthly installments. By using the app Kasheesh you may be able to bypass those higher credit card fees and even spread out the cost across multiple cards.
Daycare and child care costs
The rising cost of child care services in the United States has created a challenge for many working parents, but using a credit card can allow you to delay the actual payment until your credit card bill is due, giving you more flexibility in managing cash flow.
In many cases, you can pay daycare bills with a credit card, but it depends on the specific daycare provider's payment policies. Some daycare centers and childcare providers accept credit cards directly for payment, while others may require alternative methods like checks, bank transfers, or cash.
Vet bills and pet expenses
Whether it’s an emergency procedure or routine care, the costs of owning a pet can add up fast, and you may be considering charging them to your credit card. Luckily many, if not most, veterinary clinics will offer multiple payment options including credit card payments.
Facing a high vet bill can be stressful, especially when you’re already dealing with your pet’s health being at stake. If you’re struggling to pay a large vet bill all at once, Kasheesh can help by allowing you to split the payment across up to five cards–including credit, debit, and prepaid gift cards–giving you flexibility to pay it off on your own schedule.
Trying to manage high pet expenses? Check out:
Health insurance premiums
Self-employed individuals who purchase their own health insurance can sometimes use a credit card to pay premiums. If your provider accepts credit card payments, this can be a great way to earn rewards on what is often a significant expense.
However, not all health insurers accept credit card payments. If your provider doesn't accept credit cards but does accept debit cards, you may be able to bypass the restriction by using Kasheesh to disguise your credit card as a virtual debit card.
For those covered by the Affordable Care Act, insurers may not be required to accept credit card payments unless the state mandates it. This means payment options can vary depending on where you live.
Taxes
While you can pay certain taxes with a credit card, you’ll typically be charged a fee for doing so. For example, if you owe income taxes, the IRS allows credit card payments but adds a fee for this convenience.
However, once again a clever way to bypass that higher credit card fee is by using Kasheesh to "camouflage" your credit card as a digital debit card, with the added benefit of being able to split your tax bill across multiple cards rather than just one.
Also consider:
Utilities and services
Many utility companies, including those that provide electricity, gas, water, and trash services, allow credit card payments. However, some may charge convenience fees for this option.
For subscription services like streaming platforms (Netflix, Hulu, Spotify), credit card payments are generally accepted and fee-free, making them ideal candidates for earning rewards.
Student loans
Paying student loans with a credit card is sometimes possible, depending on the lender. However, it’s worth noting that many student loan providers won’t accept credit card payments directly.
An alternative strategy is to use rewards earned from your credit card to pay down your student loan balance. For instance, if you earn cash-back rewards, you can apply the cash back to your loan, effectively lowering the amount you owe.
Conclusion
In summary, paying certain bills with one or multiple credit cards can be a smart financial move, especially if you’re able to take advantage of rewards or meet the spending requirements for a credit card bonus.
However, it’s important to be cautious and avoid fees that negate the benefits. Additionally, you must be able to pay off your credit card balance in full each month to prevent interest charges from accumulating.
By using Kasheesh to split your bills across multiple credit cards (or a mix of credit and debit cards) you can avoid some of the downsides by keeping your credit utilization lower on each card, minimizing debt by only partially charging your credit cards, and even bypass higher credit card processing fees.
Not using Kasheesh yet? Start splitting bills across multiple credit and debit cards:
FAQ
Is it good to pay bills with a credit card?
Paying bills with a credit card can be beneficial if you earn rewards and can pay off the balance in full each month to avoid interest charges.
When should you not pay with a credit card?
You should avoid using a credit card if there are high processing fees or if you cannot afford to pay off the balance, which could lead to accumulating debt.
Is it better to pay with a debit or credit card?
A credit card is better for rewards and fraud protection, while a debit card is better for avoiding debt since you’re using available funds. Learn the differences between credit and debit.
Does paying bills on a credit card affect your credit score?
Yes, paying bills with a credit card can affect your credit score by impacting your credit utilization, which makes up a significant portion of your score. You can keep your utilization rate lower on individual cards by using Kasheesh to spread payments across multiple cards.
What bills cannot be paid with a credit card?
Typically, mortgage payments, many car loans, and some smaller landlords won’t accept credit card payments directly.
