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Money Matters Blog

Tuesday, October 27, 2020

When Does it Makes Sense to Pay a Bill with a Credit Card?

Credit cards and debit cards offer incredible convenience, but is it a smart idea to pay monthly bills with them? Choosing to pay a bill with a card can have a significant impact on your general financial wellness — for better or for worse. It’s important to consider the many variables of this decision before going ahead with it.

Let’s take a closer look at the pros and cons.

The advantages of paying bills with a credit card or debit card

  • Automate monthly payments so they’re always on time.
  • Build credit with a consistent monthly payment.
  • Earn rewards for money that needs to be spent anyway.
  • Enjoy consumer protection, like zero or minimal fraud liability, guaranteed returns and more.
  • Pay your bills quickly without the hassle of writing out checks and using snail mail.
  • Budget easily with payments that can always be tracked.
  • Payments post promptly.

The disadvantages of paying bills with credit or debit cards

  • There may be fees for paying the bill with a debit or credit card.
  • For consumers who are already carrying high debt, it can make a difficult financial situation worse. Similarly, it isn’t responsible to set up an automatic monthly payment through a debit card that is linked to an account that may not have enough money to cover the charge.
  • Credit utilization may cross the threshold to an undesirable rate.
  • Interest may accrue for consumers who cannot pay their entire credit card bill each month.

Which bills can I pay with a credit or debit card?

It’s likely you won’t be able to pay mortgage, rent, or car payments with a credit or debit card. Many insurance payments like car, home, and health insurance can usually be paid with a card, but may require an extra fee to do so. Likewise, tax payments typically require a fee to be paid by debit or credit cards, which can really add up if it’s a percentage-based fee.

Monthly utility bills, on the other hand, generally don’t require a fee to be paid for by a credit or debit card. Subscription services (ie: gym memberships, music and streaming services), phone and utility bills, as well as internet and cable providers are your best bet.

Before deciding whether to pay a specific bill with a credit or debit card, it’s best to check with your provider to find out if this is a viable option and if there will be a fee attached for paying with plastic.

The Bottom Line

Sometimes, paying bills with a credit card or debit card makes perfect sense, but it sometimes does not. Before deciding which way to go, consider all relevant factors detailed above to be sure you’re making the responsible choice. If you would like help deciding, our Member Contact Center is available at (877) 937-2328 to assist you in making the best choice for your situation.

 

Your Turn: Do you pay any of your monthly bills with a credit card or debit card? Tell us about it in the comments.

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