Can I pay bills with a credit card?

You should use a credit card when you are making a big purchase, building your credit, traveling overseas or domestically, making hotel or car rental reservations, spending money in an emergency, and even making everyday expenses. In fact, if you can use a credit card for a purchase, you probably should, because all credit cards offer a ... read full answer$0 fraud liability guarantee. If someone does steal your credit card information, all fraudulent charges will simply be cancelled, which is preferable to your checking account getting drained or frozen as you wait for a debit card fraud claim to get processed. And of course, when cash is stolen, it’s usually gone for good.

Rewards are another great reason to opt for credit cards when making a purchase. Rewards credit cards offer cash back, points, or miles for purchases – some of which can be worth up to 5% of the purchase amount, depending on the credit card. It’s essentially a discount on everything you buy with the card. Some travel credit cards offer benefits, such as luggage and rental car insurance, that can be very valuable to a frequent traveler. But you only get those benefits when you use the card for the travel purchase.

Examples of when to use a credit card:

• To Build Credit. Credit cards are by far the easiest and most practical way to build credit history. Each month you have a credit card – even as an authorized user – credit bureaus receive information about your account. If you pay the bill on time every month and avoid racking up a big balance, you’ll have a good credit score as time goes on.
• In Emergencies: Credit cards are a good option for surprise situations that no one plans for – car trouble, emergency vet bills, and household repairs, for example. And if your emergency savings aren’t quite where they should be, a credit card can offer a certain peace of mind. Sometimes paying interest can cost less than the alternatives.
• For Everyday Purchases: Regular expenses like gas, cellphone bills, and groceries present opportunities to capitalize on a rewards credit card. You will ultimately save money from rewards like cash back, points, or miles. Just don’t undo rewards savings by carrying a balance and paying a bunch of interest.
• For Large Purchases. Credit cards with 0% APR periods are great financing opportunities for big purchases. And they may offer extra safeguards that come in handy with a large purchase, such as price/purchase protection or extended warranty benefits. Using a rewards credit card will make the big purchase a little cheaper, too.
• To Pay Off Debt. Using a credit card to pay off debt may sound contradictory. But if you have an existing high-interest debt, a balance transfer credit card could allow you to pay it off faster and for less money. Look for a balance transfer offer that doesn’t charge a transfer fee and has the longest interest-free period.
• When Traveling: Hotels and car rental agencies often put pre-authorized deposits or holds on your debit or credit card. It is better to have funds temporarily held up on a credit card than your checking account. It’s also worth noting that credit cards are the cheapest way to convert foreign currency, so using a credit card overseas is an excellent idea – as long as you have one with no foreign transaction fees. Keep in mind that some credit card companies ask for notification before a cardholder starts traveling, so that they don’t mistake card activity from a new area for fraud.

It’s worth considering that your income and credit score might determine which scenarios you’ll benefit from using your credit card. For example, if you have a high interest rate or low credit limit, financing big-ticket buys may not be an option. So start small, with putting one or two regular expenses like gas or a gym membership on your card. Pay it off in full each month to create a history of responsible credit use – and to avoid credit card debt.

Lastly, there are times when using a credit card is a bad idea. Consider yourself and your habits before you take this advice to use a credit card for everything. Yes, credit card use has its benefits. But most of those benefits come with a big responsibility to not spend more than you can repay in a reasonable amount of time, and none of those benefits outweigh the negative effects of prolonged credit card debt.

If you don’t trust yourself to use a credit card for purchases, you can still build credit by simply having a credit card – even if you don’t use it.

You can pay a mortgage with a credit card – just not directly. Lenders typically prohibit people from paying off debt with more borrowed money because it’s a risky practice that can’t be sustained for long. For all your mortgage provider knows, you might be paying with plastic because you don’t have enough money in your bank account, not because it’s a great opportunity to earn rewards. And if you were to rack up more credit card debt than you can afford, the mortgage payments would stop, too.... read full answer

So it’s understandable that mortgage servicing companies don’t allow credit card payments. But the fact that homeowners still want to make mortgage payments with a credit card creates an opportunity for other companies to fill the void and facilitate such transactions.

The easiest way to pay your mortgage with a credit card is through a third-party service such as Plastiq. They’ll turn your credit card charge into either an electronic payment or a check, and deliver it to your mortgage provider. But you’ll have to pay a fee to use a service such as Plastiq to pay your mortgage with a credit card. Plastiq charges 2.5% of each transaction.

If you’re earning rewards at the market-average rate of roughly 1% cash back, this is a money-losing proposition. But it could work out if you’re targeting a big initial bonus – say, $400 for spending $3,000 in three months. A 2.5% credit card fee on $3,000 in mortgage payments would amount to just $75, meaning you’d be up $325 overall.

It’s also worth pointing out one other way to pay your mortgage with a credit card, but it’s really only applicable to your final payments. You could transfer your remaining mortgage debt to a 0% balance transfer credit card. Most major credit card companies allow you to transfer home loans to their credit cards. You just have to find a card with a reasonable transfer fee and make sure you can pay off your balance before regular rates take effect. Credit card interest rates are several times higher than mortgage rates, after all.

All of that might be tough to take in. So for your convenience, we’ll summarize the main points below.

Here’s how to pay a mortgage with a credit card:

• Use a third-party service. You’ll need a go-between because lenders don’t directly accept mortgage payments by credit card. Plastiq is a popular service that converts credit card charges into a payment method accepted by your lender. A money-sharing service such as Venmo could be an option, too. But lenders aren’t likely to accept this type of payment, and there’s a 3% credit card fee.
• Transfer a balance. You shouldn’t do this until you’re in the home stretch and can pay off your remaining balance before the end of a credit card’s 0% introductory period. Nine of the 15 largest credit card companies allow you to transfer mortgage debt to a credit card.
• Watch out for fees. Either balance transfer fees or the credit card convenience fees charged by third-party services could throw off the value of paying your mortgage with a credit card for points, miles or cash back.

Interestingly, paying rent with a credit card is much easier than using plastic to pay your mortgage. Many landlords accept credit card payments directly. And if yours doesn’t, there are a variety of services that can help. Not only can you rack up rewards by paying rent with a credit card, but you can also build credit. Some of the same services that facilitate rent payments with credit also make sure the payments are noted on your credit report.

There are a few ways to make a car payment with a credit card, whether you have a loan or a lease. But paying directly with a credit card probably won’t be among them, as auto lenders generally will not accept credit cards. They may or may not even accept direct debit card payments. In order to make car payments with a credit card, drivers must instead jump through a hoop or two and do it indirectly.... read full answer

Here’s how to pay a car payment with a credit card:

• Mobile payment services: One way to pay your car loan or lease with a credit card is to use a mobile payment app such as Venmo or PayPal as a middleman. These applications allow you to transfer money from user to user, and you can fund them with a credit card.

  So, for example, you could use your credit card to pay a friend or family member through the app, and they can then make your car payment for you or give you the money to do it yourself. Just make sure you really trust the person, and be careful because payments may count as purchases or cash advances, depending on the service and the credit card issuer. But either way, there are fees involved. Venmo, for example, charges 3% of the transaction amount.

• Money transfer services: Companies like MoneyGram and Western Union allow you to directly pay a collection of participating billers, and you can fund the transaction with a credit card. However, this may be treated as a cash advance, which would mean expensive fees and interest charges would apply, in addition to the fees charged by the service. You can learn more about how this works from our explanation of how to transfer money from a credit card to a bank account.

• Balance transfer: Several major issuers allow you to transfer an auto loan balance to a credit card: Bank of America, Barclaycard, Capital One, Citi, Discover, PenFed, USAA, U.S. Bank, Wells Fargo and SunTrust. The average balance transfer credit card offers a 0% intro rate for the first 12-13 months and charges a 3% transfer fee.
• Cash advance: Credit card companies often give customers convenience checks, which they can use to pay for things using their credit line when plastic isn’t accepted. But using such a check counts as a cash advance, which comes with an expensive fee and a high APR that kicks in right away. You can also do a credit card cash advance at an ATM using a PIN, if you’d rather get actual cash, but it will be just as expensive (if not more costly, thanks to ATM-owner fees).

The bottom line is that these options are far from ideal and should only be considered if you’re in a real bind, or if you do the math and somehow find an opportunity to save. That could be the case if you’re able to transfer part of an auto loan to a 0% balance transfer credit card, for example.