When paying bills with a credit card makes sense — and when it doesn’t

While credit cards can serve as short-term loans when you’re in a rush, they also pack a heck of a convenience factor. By putting many of your daily purchases on credit, you can avoid carrying lots of cash and writing checks. And by taking advantage of your card’s account management features and benefits, you can track your spending and even earn lucrative cash back or travel rewards.

Also: The best cashback credit cards for business

But should you pay all your regular bills on credit? Ultimately, it depends on an array of factors known only to you. Also, some invoices are more likely to be paid on credit than others.

Here are some times when credit makes sense and when it doesn’t.

Paying bills with a credit card makes sense when…

You want certain invoices to be paid automatically

One of the biggest benefits of credit is that you can settle certain bills on autopay to avoid missing a due date. Cell phone, internet, and cable bills can usually be paid with a credit card, and certain other recurring expenses like car insurance can be good candidates for “set it and forget it.” Once your credit card bill arrives in the mail, you can pay all of your bills at once.

Want to earn more rewards

Even better, if you use a rewards credit card to pay those monthly bills, you could earn a lot more cashback, airline miles, or hotel points for things you were going to pay for anyway. As long as you pay your balance in full each month, the extra rewards you earn on those regular bills can be a boon to your finances.

You want the consumer protections that come with using a credit card

Many credit cards offer additional benefits that you may not be aware of. These benefits include purchase protection, zero fraud liability, guaranteed returns, and car rental coverage. By using your credit card for bills and regular purchases, you’ll get an extra layer of security for every purchase you make.

You want an easy way to track your expenses

Because credit cards often drive people into debt, they have a bad reputation. However, credit cards can actually be a great budgeting tool if you do it right. Since every bill you pay and every purchase you make is easily tracked using your card’s online account management tools, you can use a credit card to stay within your budget or spending plan and stay on track.

You hate writing checks

Finally, if you want to simplify your life and don’t want to deal with mailing checks or paying for stamps, paying bills with a credit card can make your job easier. Log in to the website of the bill you want to pay, fill in the information online, and you’re done. As a bonus, payment can be posted immediately, as opposed to a few days later if you had sent a check.

Of course, using credit cards for regular bills is not without risk or cost. Along with the greater likelihood of getting into debt that always accompanies using credit, there are also fees to watch out for. Here are a few cases where it may not make sense to use credit for regular bills.

Also: The best starter credit card without credit

Paying bills with a credit card doesn’t make sense when…

You must pay a fee to pay an invoice with credit

While some companies let you pay your bills with a credit card at no additional cost, others charge a convenience fee to cover merchant fees charged to them by credit card companies. For example, to pay your electricity or gas bill, you may have to pay an extra 2% to 3% to use a credit card; many colleges and municipalities also charge this fee for credit card payments. And if you use a service like Plastic to pay your rent, you usually have to pay a 2.85% convenience fee. In all of these cases, the credit card rewards you’d earn probably aren’t worth it, and you’d save money by writing a check instead.

You are already struggling with debt

If you’re already in debt or struggling to avoid debt, charging your credit card regular bills could make things worse. While a credit card can help you temporarily in tough times, you should never rely on credit as a permanent crutch. If you’re in debt, you’d better put your credit cards away and pay from your bank account.

What you really need is a short term loan

If you’re absolutely strapped for cash and can’t afford to pay your regular bills, that’s a whole different story. In this case, a credit card may work, but you’ll need to choose the right one. Luckily, many 0% interest credit cards let you pay 0% APR for 12-21 months. If you use this introductory period wisely and pay down your balance as aggressively as possible, it can be a big help.

[This article was first published on The Simple Dollar in 2020. It was updated in February, 2022.]