Are you looking for an answer if it’s a good idea to pay your bills with a credit card or do you just want to earn rewards by using your credit card? In this guide, we will explain it all.
Let’s get going!
Can You Pay Bills With a Credit Card?
Yes, you can. It’s very easy and convenient. Choosing a credit card to pay your bills can have an impact on your finance, whether they are good or bad. Take a look at what are some of the advantages and disadvantages of this way of payment.
- In just a few clicks you can set up automatic payment and your credit card will pay the bills for you. This can be helpful if you can’t keep track of different due dates for payments, so to pay them all on time, automatization will help you to not miss out on any of them and accumulate any additional fees.
- Many credit cards offer a reward with every purchase. You might not want to spend money on things that you don’t need, but you have to pay the bills anyway, so this could be a good way to get that reward you deserved.
- Speaking of rewards, paying your bills with a credit card might help you receive the bonus faster as some cards have minimum spending requirements. This means that you don’t need to spend money on useless things just for the sake of getting the rewards, but you can pay your bills and get the bonus immediately.
- Paying bills with a credit card allows you to track your spendings and have a list of the purchases that you’ve made with it whether if it’s simple shopping purchases, utility bills, or taxes. This can be helpful because you can always come back and check if you’ve paid your monthly electricity bill.
- Owning a credit card comes with some extra security since banks offer protection from fraud and theft and if something happens you will get your money back in no time.
Read more: Best No-Fee Credit Cards in Canada
- Keep in mind that whenever you pay with a credit card you risk paying for some additional fees because some service providers can charge you with processing fees.
- Paying bills with your credit card is treated just like any other card transaction and you may be at risk of accumulating interest if not manage to pay for your credit card on time.
- Using your credit card too much can hurt your credit utilization rate and by date hurt your credit score as well.
- Most probably the worst thing that could happen if you pay too many bills with your credit card is that you can accumulate debt if you don’t pay off all credit installments on time.
Read more: Difference Between Debit and Credit Cards
What Bills Can Be Paid With a Credit Card?
It’s important to note that it’s not always smart to pay all your bills with a credit card. Let’s take a look at how different bills are charged and which are the most affordable for your credit card.
Unfortunately, most lenders won’t let you pay for a mortgage with a credit card in Canada, simply because they don’t want to bear the fees for processing the payments. Some do offer that service, but the fee might be too high for you to find that option affordable.
Read more: Best Mortgage Lenders
If you are renting a place through an agency that runs the business properly you might be able to pay the rent with a credit card. However, most landlords only accept cash or checks if the agency is not involved.
Paying for health insurance with a credit card can earn you many credit card rewards, but make sure to check if the insurance company accepts them, because some of them have stopped accepting credit cards.
Phone and internet companies find it very convenient for their services to be paid by a credit card as it saves a lot of time on paperwork. When it comes to utilities, there is some convenience rate so the higher the bill, the more affordable it is to pay with a credit card.
Since there are no additional fees when paying for subscription services with a credit card, many choose credit cards when paying for their Netflix or Spotify subscription.
When Should You Pay Bills With Your Credit Card?
It is known that you should pay your credit card bill by the due date to avoid additional fees, but you can also benefit by paying way sooner.
One more thing you should know about credit card debt is that usually large purchases can be divided into installments, This means that you will be paying off your debt in a period of a few months. This could be very convenient for budget planning as you will know how much money you’d need to leave on the side for covering your credit card bill.
Unfortunately, this has its downsides, one of them being that you will be paying interest every month along with your installment as well.
We need to talk about the utilization level too. When you pay for your mortgage with a credit card or insurance you are risking damaging your utilization level. With big payments like this, you will use up a lot of your credit card balance, which means that your utilization level will go up over 30%, which can hurt your credit card score.
Read more: Credit Line Increase 101
So, we recommend that you pay these bills with cash or debit card.
On the other side, paying some bills with a credit card comes with more advantages than disadvantages, especially if the bills are not on the pricier side like your mortgage or car loan.
- For example, if you are a Netflix or Amazon Prime user you can choose credit cards that offer different types of rewards, like getting cash back after you’ve spent a certain amount of money or not having to pay an annual credit card fee.
- If you frequent gyms you may earn cashback or rewards for hotels or retail shops by using different types of credit cards that offer those benefits.
- Some utility companies offer fee-free credit processing, but there are credit cards that offer cashback rewards if you pay utilities with a credit card.
How to Pay Bills With a Credit Card?
Now that we’ve concluded what bills are the best to pay with a credit card, here’s a brief explanation of how to do it.
- If you have multiple credit cards, first you need to decide what credit card you are going to use to pay your bills. The smartest choice would be to choose the one that has the highest credit limit and the most opportunities for rewards. It’s so much easier to track your payments with one card than with more credit cards.
- Be smart on your spending when you’re using your checking account. You’d need enough balance on it to pay for your credit card.
- When paying bills with your credit card it’s best to set up automatic payments so you won’t miss out on any and be charged with some extra fees.
Wrapping it all up
Planning and good judgment are your best friends when you decide you want to pay your bills with a credit card, as any careless mistake can lead to extra fees or even debt. Be responsible and you may earn some rewards or bonuses.
To pay for Spotify, visit the website and look for their official payment portal. Proceed to add the 12 digits on your credit card as well as the security code which is located at the back and click pay.
If Spotify is your go-to for streaming music and you don’t own a credit card, you can pay for it with a debit card, PayPal, or gift card.