Should You Pay Your Bills With a Credit Card?

One of the smartest — and easiest — ways to earn more credit card rewards is to charge as many regular bills as makes sense. By using credit instead of your checking account to pay bills you normally pay anyway, you can increase your rewards without spending money you don’t have.

First step: Get out your monthly bank statements and make a list of expenses you pay on a regular basis. These might include utility bills, insurance premiums, and even rent.

Next, determine whether you can pay these bills with credit. Using a credit card to pay your bills allows you to rack up cash back, hotel points, and airline miles a lot faster, but there are some downsides you need to consider, too. (See also: Why I Use My Credit Card for Everything)

Beware of Fees

While some businesses let you use a credit card without an added fee, others might charge a fixed or percentage-based convenience fee for using credit. This is because companies are charged a fee for processing credit card payments.

If a fee is involved, it’s usually not worth it to put the payment on your credit card. That additional fee would cancel out (and sometimes be more than) any rewards you’d get for the charge.

Let’s say you want to pay your $100 cellphone bill with a credit card, but your service provider charges a flat $1.95 fee for doing so. If your credit card offers 1% back for each dollar you spend, you would earn $1.00 in rewards for a $1.95 fee. You’d clearly be better off using some other payment method.

On the other hand, if you have a rewards card that offer 5% back on cellphone purchases, you’d earn $5.00 in rewards on that $100 cellphone bill in exchange for a $1.95 fee. That’s still a pretty good deal.

Don’t Get in Debt for Rewards

No matter what, you should never charge bills you can’t afford to repay right away. There is no amount of rewards that would be worth the interest credit cards charge for carrying a balance. Before you charge any bill, you should make sure you have the cash to pay your bill in full when it’s due.

Don’t Use Convenience Checks

Don’t think you can bypass the fees by using those convenience checks credit cards send you, either. Those are considered cash advances, and you will not only not earn rewards using them, but you will be assessed interest the moment they are cashed. The interest on cash advances are much, much higher than the standard APR, too. So never, ever use those checks to pay your bills!

Overlooked Bills You Can Pay With Credit

With all of those caveats in mind, consider this list of bills you might not currently be paying by credit card:

  • Cable/Internet/cellphone bill — Depending on which telecommunications service providers you use, you may be able to charge these bills to a credit card online or over the phone.
  • Car/homeowners/renters insurance — Most providers of these types of insurance let you pay your premiums with a credit card, though you may have to pay a fee. This is true whether you pay your bill monthly or just once or twice a year.
  • College tuition — Not all schools accept credit cards for tuition, and many that do charge a fee. For all the rest, charging your bill to a credit card can help you earn points and miles quickly. Because this tends to be a large bill, it’s especially important to point out that this only pays off if you can pay the credit card charges in full at the end of the month. (See also: Best Credit Cards for College Students)
  • Day care — Many larger daycare centers let patrons charge their weekly or monthly day care expenses. Smaller providers may also accept credit cards, though they are more likely to charge a convenience fee.
  • Electricity, gas, water — More and more utility companies let consumers charge their bill payments to a credit card.
  • Health insurance — If you buy your own insurance on the open market or through the exchanges, you may be able to pay for your premiums with a credit card. Although some large health insurance companies have dropped this option, there are still some providers who allow it.
  • Income taxes — The Internal Revenue Service authorizes three providers to accept and process federal income tax payments by credit card. All of them charge fees, but at least part of the fee may be tax deductible. If you want to charge state income taxes, you’ll need to check with your state for rules and additional details. (See also: Should You Ever Pay Your Taxes With a Credit Card?)
  • Kids’ sports and activities — If your children are in baseball, ballet, or any other activity, don’t forget to charge their activity fees or dues. You may also be able to charge equipment rental and uniform fees.
  • Offerings at your house of worship — An increasing number of churches, synagogues, and other houses of worship accept credit card donations. If you tithe or regularly contribute to the offering plate, this is an expense to consider charging, keeping in mind that part of your donation will go to pay for credit card processing fees.
  • Rent — For a few lucky tenants, paying rent with a credit card is an option. Some landlords provide this service for free. Otherwise, there are companies that will accept your credit card payment and then pay your rent or mortgage by check, but the fees are almost always greater than any rewards you could earn.
  • Subscriptions and membership dues — You can usually charge your fees for a gym, video streaming service, dating service, magazine, and other subscription services. Most large organizations will also let you pay for membership dues with a credit card.