Using your credit card to pay your bills? When it’s a good idea and when not

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Apart from being an effective means for availing short-term loans whenever you’re in a financially tight situation, credit cards can also provide a great deal of convenience. By using your credit card for majority of your day-to-day purchases, you can avoid the need of carrying large amounts of cash and/or writing checks. What more, you can even earn some handsome travel and/or cashback rewards in the process and stay on top of your finances by tracking your spending with the card’s account management tools!


However, do you think you should use your credit card to pay your regular bills? If you look closely you’ll realize that it actually depends on several different factors, which only you know about. In addition, some bills are best paid off with a credit card rather than cash or account debit. Let’s go over scenarios when it’s a good idea to use your credit card for your regular bills, and when not.

It’s a good idea when…

You’re keen on maximizing your rewards points – If you’ve got a rewards credit card and use it regularly for paying your monthly bills, you can earn plenty in terms of hotel points, air miles and cashback for things that you were anyway going to pay for with cash/debit card. Provided that you clear your card balance in full each month, the rewards points earned by making such monthly bill payments can add significantly to your finances.

You don’t like writing checks – If you’re someone who likes keep things simple and doesn’t want to take the hassle of mailing checks or making stamp payments, using your credit card to make your bill payments can make things a lot easier for you. All you need to do is log on to the website where the concerned product/service is available, fill out your information, provide the necessary payment details, and you’re done! What’s even better is that your payment will be made instantly, as opposed to having to wait for a few days after mailing a check!

You prefer paying certain bills automatically each month – A major benefit of using credit cards for paying certain bills is that you can put such payments on auto mode, wherein they’ll be made automatically each month, ensuring that you don’t ever miss any due date. Many people set their cable bills’, internet bills’ and mobile phone bill payments to be paid this way. In addition, you can set other recurring expenses such as loan payments, car insurance payments etc. on such ‘set it and forget it’ mode as well! This way, you’ll be able to pay for all such bills in one go, after you receive your monthly credit card statement/bill.

You like keeping track of your expenses – Credit cards often get branded as evil because their misuse brings a lot of people under debt. However, if used mindfully and strategically, the same credit cards can be utilized as excellent budgeting tools. As you can easily track every purchase and every bill with the credit card’s account management tool, you can use it strategically to keep yourself within budget each month.

You’re keen on safeguarding yourself with the consumer protection offered by credit cards – Many credit cards come with additional perks that not everyone knows about. Some of the important perks offered by a large majority of cards are guaranteed returns, purchase protection, car rental coverage, $0 fraud liability and more. Thus, using your credit cards to pay for your monthly purchases and bills can also provide you with an added layer of security, which isn’t otherwise available with cash or check payments.

However, you should remember that using credit cards to make regular bill payments isn’t entirely a risk-free deal. Apart from the general risk of burying yourself under credit card debt, you may also need to cough up additional fees on every purchase/payment.

Let’s go over some instances when it’s not a good idea to use your credit card to pay your bills.

It’s not a good idea when…

You’re already having a hard time with debt – You’d be better off avoiding paying your bills with your credit card if you’re already having a hard time clearing your existing debt and are in no position to incur more. Although credit card can help you tide over the lean times, you must never rely on them as your constant crutch. If you’re someone who constantly finds himself/herself in debt, you’d be better off avoiding credit card completely and pay with your debit card/bank account instead.

What you actually require is some short-term loan – It’s a different matter altogether if you’re in a cash-strapped state and don’t even have a dime to pay your monthly bills. Although a credit card can come to your rescue in such a situation, but you’ll need to use the right card the right way. There are several 0% APR credit cards in the market that offer 0% interest-free for the initial 12 to 21 months. These cards can be very helpful if you use them wisely along with a well-thought-of debt repayment plan. On the other hand, you could avail a short-term loan to tide over such times.

You need to cough up additional fee while paying such bills with credit card – Although many companies allow you to make bill payments with credit cards, without charging any extra fees, there are others that put a convenience charge on such transactions, mainly to cover the merchant fees charged by the credit card issuers. Hence, you may have to pay an additional 2% to 3% while making your monthly gas or electricity bill payments with a credit card. Several municipalities and colleges charge such additional fees too. Any rewards points you may earn on such card transactions may not be of much use as you could’ve easily saved more money by paying directly with cash or check instead.

Final thoughts

Nothing denying that you can make your bill payments with a credit card and earn rewards points in the process, but the question is, should you be doing that?

It actually depends on the situation.

If you have ample cash available and simply wish to accumulate rewards points, paying as many bills as you can by your credit card (without having to pay any additional fee) may be an excellent idea.

However, paying bills with your credit card and not having any realistic plan to clear your card debt, can put you in a very difficult situation. You’d be better off sticking to cash payments and budgeting your expenses in such a scenario instead.

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