Using a credit card for regular expenses can be convenient. You can sometimes use your credit card to pay utilities and other bills, and you may be able to earn points, miles or cash back on these purchases depending on the credit card. However, you may also have to pay fees or surcharges to use a credit card that may outweigh these benefits. Read on to learn more.
What types of utilities and other bills can be paid with a credit card?
You may be able to use your credit card to pay a variety of bills and utilities (like electricity, water, gas, cable and internet, and phone), subscription services (streaming platforms, software subscriptions, memberships) and insurance premiums.
However, before you use your credit card to pay your bills, check with the individual vendor regarding their policies and fees. Some vendors may not accept credit cards or may charge an additional fee for you to use one, which is less likely to be the case if you pay via check or transfer money directly from your bank account. Certain expenses, like rent or mortgage payments, generally can’t be directly paid with a credit card.
Benefits of paying utilities and other bills with a credit card
Paying a bill with a credit card could come with a variety of advantages, including:
Earn reward points, cash back or miles
If you use a rewards credit card to pay bills and utilities, you could earn points, miles or cash back on qualifying charges.
Set up automatic payments
You may be able to link your credit card to recurring bills to set up automatic payments. This may help you avoid late fees, missed payments and reduce the hassle of manual payments each month.
Credit cards can help you budget
Using your credit card to pay recurring expenses could also help you budget. Credit card statements provide a detailed record of your spending, which could be a helpful tool for tracking expenses and identifying spending patterns.
Improving your creditworthiness
Finally, consistently paying off your credit card’s full statement balance on time helps build your creditworthiness. Using your credit card to pay bills and showing regular, responsible use can positively impact your credit score.
Drawbacks of paying utilities and other bills with a credit card
On the other hand, there can be downsides when using your credit card for these expenses:
Credit card interest
If you don’t pay off your credit card statement balance each month in full, you’ll be charged interest. The interest charges may outweigh the benefits and convenience of using a credit card.
Service fees from vendors
Some vendors charge service or convenience fees for credit card payments. These fees can add up, especially for large, recurring bills, and outweigh the benefits of using your card. For example, if a vendor charges a 2% fee and you only earn 1% cash back, it might not be worth it to pay with a credit card.
Impact on credit utilization
Using your credit card to pay utilities and other bills can increase your credit utilization, which is the percentage of your total available credit currently in use. High credit utilization can negatively affect your creditworthiness.
Is paying utilities and other bills with a credit card a good idea?
Making payments with a credit card can be a good strategy, particularly if the vendor does not charge an additional fee for using a credit card. It could help you earn rewards and keep better track of your finances. However, if the vendor charges a fee, paying a bill with a credit card may not be worth it. Remember, if you don’t pay your statement balance in full every month by the due date, you can end up paying interest on these expenses.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
