Is it smart to pay your bills with a credit card? Rewards aren’t always worth it
Paying all of your bills each month can be overwhelming. It requires proper planning to make sure everything is paid on time and in full. But there may be a solution to help you work smarter, not harder. Consider using your credit card to pay your monthly bills. Doing so has its pros and cons. Take a look at them and decide if it’s the right decision for you.
Paying your bills with a credit card is an especially great idea if you have a rewards card. You’ll be able to rack up points, or cash rewards, monthly from the purchases. Those points can be used towards flights, hotel stays, gift cards, and more, depending on the card that you have. If you a have cash rewards, you can earn a certain percentage back for each transaction as well.
Paying bills with a credit card is also great thanks to auto-draft. It’s certainly more convenient to set your bills to pay themselves versus making individual payments. Once the statement comes, use the money that you didn’t send off to each biller separately to pay one bill: the credit card.
When using a credit card to pay your bills there are some mistakes to avoid making as well. It is important that you pay the total billed balance each month. If you do not, the balance will accrue interest. You definitely do not want to pay interest on top of the bills that have been charged to the card already.
Also, although you are paying the credit card off each month, that statement balance will be reported to the credit bureau monthly. If the reported balance shows 30% credit utilization on the card, it could negatively impact your credit score. To avoid that from happening, do not use your credit card to pay super high bills like your rent or car payment. Pay those using whatever method you’ve been using.
Take It Slow
When converting your bill paying method over to using your credit card, take your time. Instead of immediately switching them all over, do a few at a time. That way it will not disrupt your routine too much and you’ll be able to adjust to this new way.
You can also decide if auto-draft is for you or if you would prefer to manually submit each payment.