The best way to Pay Your Utility Payments with a Credit score Card

When you’ve got a rewards bank card, it’s possible you’ll be on the lookout for extra payments you may pay utilizing that card. I’m a giant fan of maximizing bank card rewards, since I earn money and reductions only for my regular spending.

Nevertheless, paying utility payments with a bank card isn’t all the time an incredible thought. You’ll want to verify in your utility supplier’s payment construction, since many firms cost charges for credit score and debit card funds, which might negate the advantages from the bank card issuer.

So regardless that it sounds tempting to attempt to earn cashback rewards or different perks by placing these routine payments on a bank card, it’s essential to weigh the professionals and cons earlier than doing so.

Are you able to pay utility payments with a bank card?

Most utility firms, together with electrical, water, cellular phone, and web suppliers, will permit you to use a bank card to pay your invoice. Nevertheless, some might cost a payment for the comfort of utilizing a bank card. Based on the Nationwide Affiliation of State Utility Shopper Advocates, these charges can vary from $1.50 to $5.85 per transaction.

In case your electrical firm charged you $5.85 per transaction to pay your month-to-month invoice with a bank card, you’d pay $70.20 per yr simply in charges. And keep in mind, not your whole utilities are often with the identical supplier, so that you may have to multiply charges by every particular person utility firm.

Some utility firms don’t settle for bank card funds, however you may get round this downside by utilizing a third-party service like Plastiq. You pay these servicers with a bank card, and so they’ll then pay your utility invoice utilizing a verify or cash switch.

Nevertheless, it is best to understand that these providers cost additional charges. For instance, Plastiq fees a 2.9% payment on each transaction (just like the payment many utility suppliers cost for bank card funds).

Are bank card rewards well worth the charges?

As with all monetary choice, it’s worthwhile to contemplate the associated fee in opposition to the advantages. In different phrases, are bank card rewards price greater than any charges you’d pay for utilizing bank cards? If not, it’s possible you’ll be higher off discovering one other mode of fee.

Think about your bank card pays you again a flat 1.5% on purchases. In case your common month-to-month electrical invoice is $140 and your annual complete is $1,680, that nets you $25.20 per yr in rewards. But when the utility firm’s payment to make use of a bank card is $2.50 per thirty days, you’re paying $30 per yr for that privilege, which is greater than your rewards are price.

Though not many rewards bank cards provide bonuses on utility payments like electrical energy, a couple of provide advantages in that space. The Blue Money Most well-liked® Card from American Categorical pays 6% on choose U.S. streaming subscriptions (which some may contemplate a utility invoice class).

To earn probably the most, choose a rewards card that provides sufficient to make up for charges, or use your card for utilities that don’t cost a payment in any respect. Fortunately, that’s changing into extra widespread: Based on Energy Grid Worldwide, over 30 utility firms provide fee-free credit score and debit card processing (as of 2017, in order that determine might have elevated or decreased).

Is it a good suggestion to pay utility payments with a bank card?

Utilizing your bank card to pay for utilities might sound like a no brainer to earn rewards, however there are distinct advantages and disadvantages it is best to contemplate.

4 causes to pay utility payments with a bank card

• You need to automate funds: For those who hyperlink your utility accounts to a bank card, you may often join computerized funds. Autopay will make sure you by no means miss a fee, providing you with one much less factor to fret about.
  
• You need to observe your spending: You might discover it useful to sync your bank cards with a budgeting app, serving to you observe your spending and handle your cash.
  
• You don’t need to write a verify: For those who’re like me and your checkbook hardly ever sees the sunshine of day, paying for utilities with a bank card is rather more handy. You don’t want to recollect to write down and mail a verify (avoiding the effort and price of stamps, too).
  
• Card rewards outweigh additional charges: Your bank card rewards factors or money again can add up in the event you use your card to pay for utilities. For those who had $4,000 per yr in utility payments and used a card that provided 1.5% money again on each buy, you’d get $60 in money again yearly. However be careful for card charges.

4 causes to pay utility payments with a special mode of fee

• The utility firm fees excessive charges: Many utility firms cost a processing or comfort payment for bank card funds, so it is best to make sure the bank card factors you may earn will offset the charges you pay.
  
• It’s important to use a third-party service: Some firms received’t even permit you to pay by bank card. In that case, you’ll as a substitute have to make use of a third-party service in the event you’re set on utilizing a bank card, incurring additional charges.
  
• You’re apprehensive about your credit score rating: It’s attainable that utilizing your playing cards to pay for utilities may harm your credit score rating. Examine your credit score utilization — how a lot of your accessible credit score you utilize. This accounts for 30% of your FICO credit score rating. With extra fees in your card, you’ll use extra of your credit score line, doubtlessly rising your credit score utilization and lowering your credit score rating.
  
• For those who don’t pay your steadiness in full: For those who’re on the lookout for bank card rewards, use your playing cards properly. For those who’re apprehensive you may let your bank card steadiness develop as a substitute of paying it off in full every month, it’s higher to pay by verify or ACH.

FAQs

Bank cards we suggest for paying your utility payments

For those who determine to make use of a bank card to make utility invoice funds, contemplate a common card that provides a flat rewards construction on each buy.

For instance, the Chase Freedom Limitless^® lets you earn 6.5% money again on journey bought by Chase Journey℠, 4.5% money again on drugstore purchases and eating at eating places, together with takeout and eligible supply service and three% money again on all different purchases (on as much as $20,000 spent within the first yr). After your first yr or $20,000 spent, earn 5% money again on journey bought by Chase Journey℠, 3% money again on drugstore purchases and eating at eating places, together with takeout and eligible supply service and limitless 1.5% money again on all different purchases. So you can earn $60 price of rewards at a 1.5% fee after spending $4,000.

Or the Capital One Enterprise Rewards Credit score Card offers you 2 miles per greenback on each buy, on daily basis, 5 miles per greenback on accommodations and rental vehicles booked by Capital One Journey and 5 miles per greenback on Capital One Leisure purchases by 12/31/25. With $4,000 price of utilities, you can get 8,000 miles — an $80 worth you may redeem towards journey.

By buying round for the finest bank cards, you could find a card that matches your spending habits and life-style.

Wish to pay for extra family bills along with your bank card? See how you can cowl your lease, mortgage, and even scholar mortgage payments along with your card.

One essential factor to bear in mind about bank cards is that you simply by no means need to improve your spending solely for the aim of incomes extra rewards. Whereas money again, journey perks, and different advantages are terrific, it is best to by no means go into debt or make pointless purchases within the title of rewards.