Should I Pay My Bills with a Credit Card?

As anyone knows, credit cards can be great for making your financial life more convenient. And yes, that can even include paying your bills. But, using credit cards to pay bills is definitely not for everyone. Used unwisely, it can cause considerable (and ongoing) financial stress and grief. So it’s important to proceed with caution, and weigh the pros and cons of credit card use beforehand, to avoid unnecessary stressors. We’ve listed some important points to bear in mind when considering whether to use credit cards to pay your monthly bills …

Advantages of Using Your Credit Card to Pay Your Bills

When used correctly, credit cards can represent certain advantages. They can …

• … help your credit score with on-time payments.

• … receive rewards like airline miles or cash-back.

• … increase fraud protection.

If you are financially able to make your monthly credit card payments on time, using a credit card to pay bills can also help simplify your finances. The convenience of making just one payment for most of your bills, all on the same day, can have great appeal, while allowing you to more easily track your spending at the same time.

Another strategy to potentially take fuller advantage of the benefits of a credit card (but again, only if you are in a financial position to pay them off in full, and on time!) is to drive up even larger rewards on your purchases by adding job/company-approved expenses to your credit card. It can be a nice place to “park” those expenses while waiting to get reimbursed shortly after. If you are already making larger payments like monthly rent, an energy bill or an auto loan, you can receive even larger rewards employing this method.

More about fraud protection: Most credit cards do come with some form of fraud alert/protection benefits. So by utilizing these features, and not having your personal bank account information saved online, you’re actually helping to keep your money and information safe from fraudulent activity.

Potential Pitfalls of Using Your Credit Card to Pay Your Bills

As with most things in life, there is a flip side – especially when it comes to using credit cards to pay your bills. You’ve read the pros, here are some cons:

• It is easy to overspend … sometimes too easy.

• Interest rates (especially high ones) accumulate on unpaid items.

• Maxing the limit of your card can lower your credit score.

To elaborate on that second point: If you carry a balance on your credit card from one month to the next, you’re adding on to the cost of your monthly bills in the form of interest charged on previous balances you couldn’t pay off. That debt, unpaid for too long, can literally become an out-of-control financial burden over time.

There are other potential pitfalls, such as long-forgotten unused subscription fees sitting on your card for longer than realized if you don’t regularly review your charges. We recommend you dive into your charges, and look for hidden fees scattered throughout your monthly bill payments, such as processing and convenience fees. Some fees might be a set dollar amount, but others may vary by charging you a percentage of your overall payment due.

All in all, when considering payment options for your monthly bills, our advice is simply to be wise with whatever methods you choose. Getting in over your head in credit card debt can be scary, and take months or even years to get out from under. Do yourself a favor by planning thoroughly, and don’t consider paying your bills with a credit card until you have an established a realistic and accurate monthly budget. And if you are currently experiencing financial hardship, be especially cautious in your decision, and resist the temptation for the immediate “easy” relief a credit card might represent. Keep in mind that not being able to pay your bills for an extended period of time after you have charged them to your credit card can ultimately mean your bills going to collections, which can damage your credit score(Opens in a new window).

There are Other Options

Fortunately, credit cards aren’t the only option when it comes to conveniently and regularly paying bills. Many people save themselves a lot of potential trouble by simply using a debit card as their primary payment method (while also utilizing automatic payment methods), or Bill Pay through their bank. There are many reasons these methods can be preferable to using a credit card.

We hope we have provided some clarity and guidance as you consider using credit cards as a payment method option when taking care of your monthly bills. If you have questions regarding setting up monthly payments and establishing a healthy budget, contact one of our banking professionals to see how we can help.