Should i use a credit card to pay bills

Before using a credit card to pay your bills, ask yourself the following questions.

It can be tempting to use a credit card to pay your bills, whether money is tight or you’re thinking of earning reward points. Whatever your reason, proceed cautiously as credit card debt can accumulate fast if not handled correctly. Before paying bills with a credit card, ask yourself the following questions.

Can I pay my credit card bill in full?

If the answer is no, it’s strongly advised that you use cash to pay your bills. Remember: interest charges can add up quickly, and depending on your card’s interest rate, you may find yourself paying much more over the long-term.

Is there a clear benefit?

There may be some instances where making a payment with your credit card is beneficial. For example, you may choose to use credit to make a payment that will later be reimbursed by your employer. Likewise, if you’re taking advantage of a credit card perk or an introductory offer, using your credit card to pay bills can be beneficial — provided you are able to pay your balance in full right away.

Will you be charged a fee?

Be sure to read the fine print before using a credit card to cover a bill, as some companies will charge a fee for doing so. Fees may be a set dollar amount; however, some cards will charge you a percentage of your payment. While the percentage might be minimal when applied to a small utility bill, it could be quite significant in other instances, such as with rent payments. These fees can add up over time, so proceed carefully.

If You’re Experiencing Financial Hardship

If you’ve just lost a source of income or are struggling to make ends meet on your current income, it may be especially tempting to use a credit card to help fill the gaps. However, in these instances, it’s more important than ever to proceed cautiously. As a rule of thumb, you should only use your credit card for bills that you will be able to pay off before interest starts accruing. Before using your credit card, follow these strategies for what to do when you can’t pay a bill.

It’s important to remember that using your credit card to pay bills is a short-term solution that can potentially set you further back financially if you’re unable to pay your credit card bill when the time comes. You could negatively impact your credit score and, depending on how long your current hardship lasts, could potentially lead to unmanageable debt.

Still have questions? We’ve got the resources to help. For tips, tools, and articles designed to help you make smarter money management decisions, visit Regions Next Step.

While credit cards can serve as short-term loans when you're in a pinch, they also offer one heck of a convenience factor. By putting many of your daily purchases on credit, you can avoid carrying around a hunk of cash and writing checks. And by taking advantage of your card's account management features and perks, you can track your spending and even earn some lucrative cashback or travel rewards.

But, should you pay all of your regular bills with credit? At the end of the day, it depends on an array of factors only you know. Plus, some bills are more suitable to be paid with credit than others. 

Here are some times when credit makes sense and when it doesn't.

You want certain bills paid automatically

One of the biggest benefits of credit is that you can set certain bills on auto-pay to avoid missing a due date. Cell phone, internet, and cable bills can generally be paid with a credit card, and some other recurring expenses like car insurance may be good candidates to "set and forget." Once your credit card bill arrives in the mail, you can pay all of your bills at the same time.

You want to earn more rewards

Better yet, if you use a rewards credit card to pay those monthly bills, you'll be able to earn a lot more cashback, airline miles or hotel points for stuff you were going to pay for anyway. As long as you pay your balance in full every month, the extra rewards you earn on those regular bills can be a boon to your finances.

You want the consumer protections that come with using a credit card

Many credit cards offer additional perks you may not know about. These perks include purchase protection, zero-fraud liability, guaranteed returns and auto rental coverage. By using your credit card for regular bills and purchases, you'll enjoy an added layer of security for every purchase you make.

You want an easy way to track your spending

Because credit cards often lead people into debt, they get a bad rap. However, credit cards can actually serve as a great budgeting tool if you go about it the right way. Since each bill you pay and purchase you make is easily tracked using your card's online account management tools, you can use a credit card to stick to your budget or spending plan and keep yourself on track.

You hate writing checks

Finally, if you want to simplify your life and don't want to deal with mailing checks or paying for stamps, paying bills with a credit card can make things easier. Log on to the website of whatever bill you're looking to pay, fill out the information online, and you're done. As an added bonus, the payment might post right away, as opposed to a few days later if you had mailed a check.

Of course, using credit cards for regular bills isn't risk- or fee-free. Along with the greater likelihood of falling into debt that always comes with using credit, there are fees to watch out for as well. Here are a few instances where it may not make sense to use credit for regular bills.

Also: The best starter credit card for no credit

You have to pay a fee to pay a bill with credit

While some companies will let you pay bills with a credit card free of any additional fees, others charge a convenience fee to cover the merchant fees they're charged by credit card companies. For example, to pay your electric or gas bill, you may need to pay an extra 2% to 3% to use a credit card; many colleges and municipalities also charge such fees for credit card payments. And if you use a service like Plastiq to pay your rent, you usually have to pay a 2.85% convenience fee. In all of those cases, any credit card rewards you'd earn are likely not worth it, and you'd save money by writing a check instead.

You're already struggling with debt

If you're in debt already or struggling to avoid debt, charging regular bills to your credit card could make things worse. While a credit card can help you temporarily in lean times, you should never rely on credit as an ongoing crutch. If you're in debt, you'll be better off stashing your credit cards away for safekeeping and paying from your bank account.

What you really need is a short-term loan

If you're absolutely strapped for cash and can't afford to pay your regular bills, that's an entirely different story. In that case, a credit card might work, but you'll want to choose the right one. Fortunately, many 0% interest credit cards let you pay 0% APR for anywhere from 12 to 21 months. If you use that introductory period wisely and pay off your balance as aggressively as you can, this can be a huge help.

[This article was first published on The Simple Dollar in 2020. It was updated in February, 2022.]

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