by Chelsea Springli 
Is it good to pay bills with a credit card? It can be, but only in the right circumstances. Paying monthly bills with a credit card can make payments more convenient, help you earn rewards and potentially help build your credit history. But fees, interest charges and higher credit utilization can outweigh those benefits if you aren’t careful.
If you can pay your credit card balance in full each month and your biller doesn’t charge a credit card fee, using a card for certain bills may make sense. Here’s what to consider before deciding whether you should pay bills with a credit card.
Pros of Paying Your Bills with a Credit Card
- Automate monthly payments. Setting up automatic payments can make it easier to pay bills on time and reduce the risk of late payments and fees.
- Build credit with a consistent monthly payment. Using a credit card for a monthly bill can be a great way to build a positive credit history. Just be sure to pay the bill in full and on time every time.
- Earn rewards on money that you’re already spending. If your credit card offers rewards, using it for bills you already need to pay may help you earn cash back, points or other rewards without adding unnecessary purchases.
- Budget easily. Paying with a credit card makes for easy tracking of monthly spending. Be careful to not charge too many transactions on your credit card so you still have plenty of credit utilization.
- Payments can post promptly. Bill payments made via credit card will generally post within one or two business days. Contrast that with a check that needs to be mailed out, delivered to the correct party and then deposited and cleared until the payment is finally processed.
Cons of Paying Your Bills with a Credit Card
- There may be fees for paying the bill with a card. Pay close attention to the payment options on every bill. Some service providers charge a processing fee for paying with a credit card. Contact your service provider to see if they charge a processing fee. This’ll mean that you pay more than you need to for the bill.
- If your financial situation is under strain, then this can make it worse. For members who are already carrying a sizable amount of debt, it may not be the best idea to charge a monthly bill to a credit card. To make this work, you have to plan ahead to make sure that you have enough money in your checking account to pay off the purchase when your credit card statement arrives. If you don’t additional interest fees will be added, putting you further into debt.
- Higher balances can increase your credit utilization. Charging several bills to your credit card can increase the percentage of your available credit you’re using. Higher credit utilization can negatively affect your credit score, even if you make your payments on time.
- Interest may accrue. Members who cannot pay their entire credit card bill each month could be burdened with more accrued interest than they can afford if they choose to pay their monthly bills with a credit card. Rethink this idea if you aren’t confident you can pay your credit card balance in full each month.
Alternatives to Paying Bills With a Credit Card
A credit card isn’t your only option. Depending on the biller, you may be able to pay with a debit card, automatic withdrawal from your checking account or your financial institution’s online bill pay service.
Paying directly from your checking account can be a good choice if you want to avoid adding to your credit card balance. Online bill pay can also make it easier to organize and manage multiple payments in one place.
Whatever method you choose, account alerts and regular transaction monitoring can help you keep track of payments and quickly spot unauthorized activity.
Deciding How to Pay Your Bills
Before deciding whether to pay a specific bill with a credit 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 for paying with plastic. Typically, you would be able to pay your subscription services, phone bill, utility bills, internet provider and cable provider with a credit card without a worry of a fee. For me, I do a little of both!
Sometimes, paying bills with a credit card makes perfect financial sense. Before deciding which way to go on any bill, consider all the relevant factors detailed above to be sure you’re making the best choice.
