Photo: Ollyy (Shutterstock)
If you live in fear of racking up debt, you might be hesitant to pay any of your bills with a credit card. While you should, if at all possible, avoid putting bills on a credit card when you can’t afford to pay them, you do have the option to pay most bills with a credit card. With the right strategy, using your card on bills can earn you major rewards and points.
Here’s what to know about when it might make sense to pay your bills with a credit card, and why it might be too risky for some.
What bills it’s safe to pay off with a credit card
For savvy credit card users, there are plenty of reasons to put your bills on a card:
Earn rewards or pointsAutomate payments to save time (and never miss a payment)Track all your bills on one statementBuy yourself time to pay
Here are the most convenient types of bills that should consider linking to your credit card to earn more points:
Household utilitiesSubscription servicesFitness membershipsCable and internetCell phoneCar insuranceMedical bills
Here’s the thing: Paying your monthly bills by credit card only is worth it only when you’re certain you will pay your balance in full and on time each month.
If this is not a certainty, consider the risks associated with using a credit card for your bills.
Reasons not to use a credit card for your bills
The perks of credit card rewards aren’t always worth the risks associated with using credit to pay off monthly bills.
Losing out to extra fees
Processing, service, hidden fees—whatever you call them, they’re insidious, and they’re bullshit.
There are plenty of bills you can technically pay with a credit card, like taxes or mortgage payments, but they almost always come with a convenience fee or third party service cost. These fees will almost always be two to three percent of the amount paid, and that cost outweighs whatever credit card rewards you might have earned.
Racking up interest
As we mention above, using a credit card only makes sense for those 100% positive they can their balance in full, every month. Otherwise, the risk of accruing interest charges is too high.
Hurting your credit score
When you put your bills on your credit card, you’ll likely increase your credit utilization. If the cost of your bills is going to send your utilization rate through the roof (or over 30%), the ensuing hit to your credit score isn’t worth it.
This is the bottom line, and the most obvious reason to avoid using your credit card to pay your bills. While a credit card can buy you some time, the importance of paying off your balance each month cannot be overstated. Falling into debt is a far greater risk than any potential reward of a few credit card points.
If you are interested in putting your bills on a card, you want to check out which cards offer the most bang for your buck. We recommend perusing NerdWallet’s list of best credit cards for recurring bills here.