Credit cards can be a convenient way to cover everyday purchases, pick up the tab for travel expenses or simply handle a financial emergency in a cash crunch, but that’s not all they’re good for. You can also pay bills with a credit card, which is useful if you’re hoping to streamline your finances.

So which bills can you pay with your credit card? Surprisingly, more than you might think. Generally, you can use a credit card to pay for things like:

  • Utility bills, including water, gas and electric
  • Cellular or landline phone service
  • Cable and internet service
  • Streaming and subscription services
  • Insurance
  • Storage rental
  • Medical bills
  • Federal and state taxes

If you’re not sure about a particular bill, check with the billing department to verify their credit card acceptance policy. But if you do not pay off your credit card statement in full and by the payment due date, putting loan payments on your credit card can quickly add up and interest charges will compound.

Yes, But Should You Pay Bills With a Credit Card?

There are some advantages — and disadvantages — to paying bills with a credit card. Weighing the good against the bad can help you decide if it’s the right move.

The pros:

  • It could save you time. Paying your bills every time you get one can be time-consuming versus paying them once a month. Not only that, but if you’re juggling multiple due dates, it’s possible that a bill could slip through the cracks. If you miss the due date, you could get hit with a late fee. Setting up automatic payments for your bills using your credit card could make it easier to avoid late fees and reduce the amount of time you have to spend managing your finances.
  • You could earn rewards when you pay with your credit card. Rewards credit cards can be a valuable way to earn cash back, miles or points that you can use toward travel, gift cards and more. If you have a card that pays cash back on every purchase, for example, using it to pay bills could put some of what you spend back in your pocket.
  • It streamlines your budgeting system. Your monthly budget is a blueprint of sorts for how you’ll spend the money you’re earning. When you’re charging all of your bills to a credit card each month, it’s easier to see at a glance what you’re spending to maintain your household. You can then allot one lump sum to cover all of those expenses when you pay your credit card bill at the end of the month.

The cons:

  • You may be charged a fee to pay with credit. One potential pitfall of paying bills with a credit card is having a processing fee tacked on. If your electric company charges a $5.95 fee to accept your credit card payment, for instance, you have to consider whether it’s truly worth the convenience.
  • Interest charges can apply if you carry a balance. The other issue to consider is how interest charges could add to what you owe if you don’t pay the card off each month. If your credit card charges a high annual percentage rate (APR) for purchases, it could be an expensive way to cover your bills.

Pay Bills With a Credit Card the Right Way

If you’re planning to pay bills with a credit card, here are a few best practices to keep in mind:

1. Stick with one card for paying bills.

Choosing one card to pay bills makes more sense than spreading payments out over several cards, from a convenience and tracking perspective. If you’re angling for rewards, be sure that the card you choose offers rewards for everyday purchases, including bill payments.

2. Plan to pay your credit card in full each month.

Paying interest on any bill paid with your credit card increases the cost of those bills, and it can diminish the value of any rewards you may be earning. When you’re mapping out your budget, be sure to set aside enough money in reserve to pay your credit card in full when the bill becomes due.

3. Keep an eye on your credit utilization ratio.

Your credit utilization ratio, meaning how much of your available credit you’re using, is one factor that impacts your credit score. If you’re charging close to your card limit or maxing it out every month to pay bills, you may be causing your credit score to fluctuate.

4. Don’t put large bills on a credit card if you can’t pay them.

A rule of thumb when using your credit card is to not spend more than you can afford or else it could get out of hand very quickly. For example, if you pay your mortgage with your credit card, instead of paying 4% APR on your mortgage, you will end up paying 16.99, 22.99 or higher.

The Bottom Line

A credit card can come in handy when you have bills to pay, but it’s important to look at it from every angle. It pays to do your homework so you understand the cost involved and how that compares to any rewards you stand to earn.

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