Paying your monthly bills with a credit card seems like a win-win: You can set up autopay and never miss a bill, track your spending, and earn rewards on stuff you were already going to buy. Consumers spend more than $10,000 on food, gasoline, and transportation every year, according to Bureau of Labor Statistics data—and you probably have a cell phone payment, monthly gym membership and other bills to pay on top of those necessities. Earning rewards on those expenses can really take the edge off hitting the "Pay now" button.
This isn't to say that you should get a credit card if you have trouble paying your bills, as a high card balance could tank your credit and run up interest fees. But there are ways to use credit cards without adding too much debt. And if you have to pay bills that are already built into your budget, you might as well get some rewards in the meantime. Many of our top picks have a low or $0 annual fee, a sign-up bonus, and perks and rewards you're bound to use.
Is it a good idea to use credit cards to pay your bills?
For some payments, it's best not to use a credit card at all. Certain bills—such as rent, your tax or utility bills, or your student loan payments—can't be made with credit or can only be paid with a credit card in exchange for a 2% to 4% service fee. That fee usually cancels out any potential rewards you would earn on the card.
However, making a service payment to pay a large bill once or twice might work in your favor, if you need to spend a certain amount to earn a supersized credit card sign-up bonus. Paying your car and homeowners insurance bill in full can also help you meet that sign-up spending requirement, and these usually don't involve a service fee.
No matter which card you use, make sure you come out ahead when charging your monthly bills. Try not to spend more than your budget allows, pay off the balance each month, and make the rewards system work for you. The best part is using the points or cash back on purchases you were already going to make.
Things to Know About Credit Cards
While they may come with an annual fee, some credit cards offer perks that significantly defray (or even negate) the cost. The American Express Blue Cash Preferred, our top pick among the best credit cards to pay bills, is a good example of this.
APR rates and credit limits vary based on your individual credit. Credit limits and interest rates for each card are determined based on each cardholder's personal situation, so we did not take that information into account when evaluating these cards. One thing to remember is that if you pay your card off in full every month, you will not be charged interest.
Credit card issuers have the final say on who they accept. These recommendations were put together with the assumption that applicants would have average credit or above. That being said, banks decide who they will issue credit cards to using criteria including, but not always limited to, an individual's credit score when evaluating each applicant.
Blue Cash Preferred Card from American Express
We chose this as the best all-around card for paying bills because it hits the major expenses in most households. Cardholders earn 6% cash back at U.S. supermarkets up to $6,000 per year (then 1%), 6% cash back on select streaming services, 3% cash back at U.S. gas stations and on transit purchases, and 1% cash back everywhere else. The card comes with a $95 annual fee, but the cash-back rewards can easily make up for it—as long as you typically spend money on these types of purchases. Plus, with a limited offer through December 10, 2020, the annual fee is waived for the first year.
The card also has a “Pay It Plan It” feature, which lets you split purchases over $100 into fixed monthly payments. You still earn rewards on these purchases and won’t pay interest on them. However, you’ll pay a fixed monthly fee to use this plan, which is 0% for the first 12 months and then up to 1.17%. The fee may be low enough that it won’t cancel out your rewards, but make sure you come out ahead. This could be a good tool for paying large bills, such as your six-month insurance premium.
You also get a 0% intro APR on purchases for 12 months (then a variable APR) and—through December 10, 2020—a $300 statement credit after spending $3,000 within six months of account opening. Overall, the card is a solid pick for your wallet, whether you use it every day or just for paying bills.
It’s not often a credit card rewards you for hitting the gym. The World of Hyatt Credit Card gives you 2 points for every dollar spent on fitness club memberships, making it our pick for paying your gym bill. You also get up to 9 points for every dollar spent on Hyatt purchases; 2 points per dollar on dining out, airline tickets and mass transit; and 1 point per dollar spent elsewhere.
You can redeem points for hotel stays, transfer to airline partners or use them toward car rentals. While those are great rewards and redemption options if you travel often, you have fewer choices and less flexibility compared to other cards on this list. You’ll also have to weigh if the $95 annual fee is worth it for you.
As a bonus, new cardholders earn 25,000 points after spending $3,000 on purchases within the first three months of account opening and another 25,000 points after spending $6,000 total within six months. To help you meet the spending requirement, consider stocking up on gym essentials, such as new running shoes, energy bars and fitness clothes, during this time frame.
Best for paying your business phone and internet bill
Chase Ink Business Preferred
If your phone, cable and internet bill takes up a large chunk of your business’s expenses, this card gives you a solid rewards rate in that category, plus a cell phone protection plan to go with it. Cardholders earn 3 points per dollar on the first $150,000 spent on phone, cable and internet services; travel; shipping costs; and select advertising (and 1 point per dollar spent everywhere else). It’s a top-notch rewards rate with a high spending cap, which should more than offset the $95 annual fee.
If you charge the phone bill to your card, you get cell phone protection that covers up to $600 per claim (after a $100 deductible) if your cell phone is damaged or stolen—for you and the employees listed on your monthly cell phone bill.
The card also comes with other business-friendly perks, such as free employee cards and integration with your bookkeeping software, making it an all-around great credit card for business owners.
While you don't earn rewards for charging your cell phone bill to the Wells Fargo Propel, you do get a nice perk for it. The built-in cell phone protection plan pays to repair or replace your cell phone, up to $600 per incident (subject to a $25 deductible) and a max $1,200 per year. However, the plan doesn't cover lost cell phones, so you're out of luck in these cases.
The card also comes with no annual fee and a lucrative rewards system that helps you earn more points on some of your other bills. You get 3 points for every dollar spent on streaming services, gasoline, ride-hailing services and transit, travel, and dining out and ordering in (and 1 point per dollar on all other purchases).
Those points can be redeemed for things like travel, cash back and gift cards. New cardholders also get a 20,000-point welcome bonus after spending at least $1,000 within three months.
The main trade-off is that you won't get premium travel benefits like you would on other travel cards that do charge an annual fee. However, we picked this card for its solid cell phone protection plan, $0 annual fee and bonus rewards categories.
Find yourself frequently hitting the "Order now" button on Amazon.com? The Prime Rewards Visa Signature Card helps you get a little back on those purchases. Cardholders earn 5% back at Amazon.com and Whole Foods Market (including physical Whole Foods Market stores, 365 stores and wholefoodsmarket.com), plus 2% back at restaurants, gas stations and drugstores, and 1% back everywhere else. While there's no annual credit card fee, you'll need a Prime membership, which costs $119 per year.
If you're focused on building credit, then paying bills on time and zeroing out the balance each month will help you get there. Why not get rewards on those bills while you're at it? The Capital One® QuicksilverOne® Cash Rewards Credit Card has a flexible credit requirement—you could qualify with average credit, according to the website—and gets you 1.5% cash back on every purchase.
While many cash-back cards restrict how and when you can redeem rewards, this card allows you to redeem cash back in any amount at any time. The built-in perks, such as extended warranty, travel accident insurance and 0% foreign transaction fees, rounds out this card as a solid pick for people who are building credit.
However, there are a few trade-offs with this card. The annual percentage rate is pretty high, at 26.99%, and the card comes with a $39 annual fee. You'd have to spend at least $217 a month to offset the annual fee and pay off the balance each month to avoid interest costs. Consider setting up autopay on all your eligible bills and connecting them to this credit card. You'll be able to track your bills in one place and potentially spend enough to more than offset the annual fee.
If you want to put all your bills on one card and earn cash back, but don’t want to fuss with a complicated rewards system, the Citi Double Cash card has one of the best cash-back rates on a card with no annual fee.
You get a total of 2% cash back on every purchase: 1% when you charge it to the card and 1% when you pay it off. There’s no limit to how much you earn and no annual fee, and you pay no interest for 18 months on balance transfers made within four months of account opening (then a variable APR). You can redeem cash back as a statement credit, bank account deposit or a check, and the minimum redemption amount is $25.
While it offers pure simplicity, the Citi Double Cash also has no sign-up bonus, no bonus rewards categories and not many built-in perks. If you’re looking to step up your rewards game, consider pairing this card with another on this list. Charge eligible bills to the credit card that rewards the bonus categories you typically use, then put your other bills on this card to earn a solid 2% cash-back rate. Or, if you’ve met the spending cap on a bonus rewards category, you can start charging the bill to the Double Cash card until the cap resets.
Annual percentage rate (APR): When it comes to credit cards, the APR is simply the interest rate you pay when you don't pay off the balance at the end of your billing cycle. APRs are expressed as a percentage and come in two main types. (1) Variable APRs can increase or decrease over time. (2) Fixed APRs will never change. The average APR is about 16%; you can check your cardmember agreement to find your rate. The card issuer may apply a different APR to your purchases, balance transfers, and cash advances. If you break the terms of the card agreement, you may have to pay a higher APR, called a penalty APR, for a certain time frame.
Credit card issuer: Any bank or credit union that issues credit cards, such as Capital One, Discover, Bank of America, and Chase. The credit card issuer manages your credit limit and rewards program (if applicable), provides your billing statements, and sends payments to merchants when you make purchases with your credit card.
Credit utilization: The amount of your credit limit you're using. Credit-scoring companies base some of your credit score on your utilization ratio, which is calculated by dividing your card balance by the card's credit limit. For example, if you have a $1,000 balance and a $5,000 credit limit (1,000 / 5,000 = 0.2), your utilization ratio is 20%. Experts generally recommend keeping it at 30% or less, as a higher ratio indicates more risk and may damage your credit scores.
Should you pay off your credit card every month?
Whenever possible, it is best to pay your balance in full every month. You’ll avoid interest charges, for one, and you’ll also maintain a low credit utilization ratio. This percentage is calculated by dividing your monthly balance by your total credit line, and experts recommend keeping it at or below 30%.
But we also get that life happens, and sometimes you bring home less bacon than you anticipated, or an unexpected expense rears its pricey head. Whatever you do, make the minimum payment, and make it on time.
If you can’t swing the whole balance but you do have some cash to spare, consider paying a little more than what you have to pay. This will help lower your utilization ratio and keep your credit score in check. We love a good compromise, don’t you?
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Kim Porter has written about personal finance topics for U.S. News & World Report, Reviewed, Credit Karma, AARP Magazine, Bankrate, and more. When she's not writing, you can find her training for her next race, reading, or planning her next big trip.
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