Paying bills with a credit card

In some circumstances, it’s possible to pay bills with a credit card. But how do you know if it’s a good option? And what factors should you explore before paying bills with your credit card?

What you’ll learn:

• Depending on the type of bill and the merchant, you may be able to use a credit card to pay bills.

• Mortgages, rent and car loans typically can’t be paid with a credit card. 

• If you pay some bills, like utility bills, with a credit card, you may need to pay a convenience fee.

• Using a credit card for your monthly bills can offer opportunities to earn rewards. But make sure you know what to expect when it comes to things like due dates and interest rates.

Some lenders and service providers let you pay bills with a credit card. Others may require payments directly from a bank account or debit card. 

Bills you can generally pay with a credit card include utilities, insurance, phone services, internet, cable and sometimes rent or mortgage payments. But there may be processing fees if you use a credit card.

There really isn’t a set answer to whether you should pay your bills with a credit card. It depends on whether the lender or merchant allows it and whether it makes sense for your situation. If you can do it responsibly, you might find that paying bills with a credit card is a good choice for you.

Making bill payments with your credit card can have some advantages. These could include:

• Credit building: Using your card responsibly over time by doing things like making on-time monthly payments can help you build a credit history and improve your credit scores. 

• Convenience: Some credit cards include a variety of digital bill-pay benefits. For example, Capital One offers AutoPay, which lets you set up automatic payments for your monthly bills.

• Rewards: You may be able to earn rewards like cash back, points or miles when you pay bills with a rewards credit card.

• Flexibility: Whether you choose to pay online, over the phone or in person, you can generally use a card.

• Protection: Credit card statements can act as proof of payment in a dispute.

Making bill payments with your credit card could have some disadvantages. Some things to consider are:

• It may cost you more: Depending on your credit card’s interest rate and merchant processing fees, you could spend more paying your bills with a credit card than if you used a debit card, paper check, direct deposit or ACH transfer to send money directly from your bank account.

• It might affect your credit scores: If you can’t pay off your credit card balance after paying your bills with a credit card, you could increase your credit utilization ratio—or the amount of available revolving credit you’re using. Your credit utilization ratio can affect your credit scores.

Before you use a credit card to pay bills, consider whether:

• You understand the terms of the credit card. If you’ve read the credit card customer agreement and account opening disclosures, you’ll know what to expect when it comes to due dates, fees, interest rates and other information.

• You can pay the credit card bill on time. As the Consumer Financial Protection Bureau (CFPB) explains, you should make your payments on time, every time. That’s because your payment history is an important factor in calculating your credit scores. Missed or late credit card payments can affect your credit and lead to late fees and higher interest rates, depending on your card.

• You can pay at least the minimum. Paying your balance in full every billing cycle might help you avoid paying interest. But if you can’t pay your balance in full, the CFPB recommends paying as much as possible—and making at least the minimum credit card payment. As the CFPB explains, “The higher the balance you carry from month to month, the more interest you pay.”

There are different ways to pay bills with your credit card, depending on the type of bill and the situation. If you’re paying a bill in person, you’ll use a payment terminal to swipe, insert or tap your card. If you’re paying over the phone, you’ll give your card details to a customer service representative. 

If you’re paying online, you might enter your card information and personal details into an online payment portal. Depending on your credit card issuer, you may be able to use a virtual card number, which can help you avoid exposing your actual credit card number. 

For recurring bills for things like subscription services, you might be able to schedule a monthly automatic payment from your credit card

Paying bills with a credit card could offer flexibility and the opportunity to earn rewards. But that may not be worth it if you end up paying extra fees or interest charges. 

If you’re looking for a card that’s right for you, you can see whether you’re pre-approved for a Capital One credit card. It’s quick and easy, and it won’t impact your credit scores.