Should you charge your monthly bills to a credit card?

Apr 28, 2021

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Whether you’re trying to reach the minimum spending requirement for your sign-up bonus or are racking up miles for your next award trip, paying with your credit card over a debit card makes sense in plenty of situations.

If you’ve come from a background that taught credit cards were for emergency purposes only or, perhaps worse, that they are always a bad financial decision because they cost more in the long run, it can take a minute to get to the point where you’re considering charging everyday purchases.

But as long as you never forget the first principle of earning rewards from credit cards — pay your balance on time and in full every month — there can be huge incentives to shifting all sorts of charges and purchases to rewards credit cards.

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Once you get to that point, you may wonder if it’s a good idea to pay off your monthly bills with a credit card. This may include your cell phone, utilities, insurance or perhaps even car payments. As these are likely sizable recurring charges you face, we’ll explain when you should (and shouldn’t charge) monthly bills to a credit card.

Related: TPG’s 10 commandments of credit cards

When you should pay a monthly bill with a credit card

There are many advantages to paying your monthly bills with a credit card.

Since these are normal charges you’ll pay on a regular basis, you may as well earn points or miles on these purchases as you rack up expenses each month. There are some services that don’t allow you to directly pay with a credit card. For example, I can only use a debit card, checking or savings account for my own car payment.

Some credit cards offer bonus points on certain types of purchases. Some of your monthly bills may fit into these categories, helping you earn additional rewards.

Related: Paying rent and mortgages with a credit card

(Photo by John Gribben for The Points Guy)

For example, my Chase Freedom Flex card is one of my favorite cash-back cards thanks to its 5% bonus on rotating categories each quarter (capped at $1,500, then 1% cash back). From January to March of this year, it awarded 5% on internet, cable and phone services, as well as select streaming services. During these three months, I was easily able to earn a lucrative 5% back on my internet and cell phone bill, as well as my various subscriptions from Hulu to Netflix.

Related: Guide to saving money on streaming services

On a similar note, you’ll want to be strategic about which credit card you use to pay for your cell phone bill.

Some cards offer cell phone loss and damage protection, potentially saving you hundreds of dollars. Many Amex cards offer this benefit, as well as cards such as the Ink Business Preferred Credit Card.

Be sure to check the fine print, but as a general rule of thumb, you’ll automatically receive protection if you pay your cell phone bill with your eligible card. Since I already have Apple Care, this isn’t a huge necessity for me, but the right credit can definitely save you money if you don’t want to purchase additional cell phone insurance.

Related: How I got my cracked iPhone replaced for just $54.20 by using the right credit card

If your current credit cards don’t offer any additional rewards on your monthly bills (or you don’t want to keep up with bonus categories), consider opening a card such as the Capital One Venture Rewards Credit Card that offers an unlimited 2 miles per dollar spent. For example, if you have $500 in monthly recurring payments, you’ll earn 1,000 miles each month — equating to 12,000 miles just on these charges per year.

When you shouldn’t pay a monthly bill with a credit card

Using a credit card to cover your car payment isn’t a good idea due to add-on fees. (Photo by Ty Wright/Bloomberg via Getty Images)

While it’s generally a good idea to pay many of your monthly expenses with your credit card, there are several instances where you shouldn’t do this. When paying bills such as rent or mortgage, student loans or car payments, oftentimes, you’ll be charged an additional fee for using a credit card to pay, which can offset the rewards you’d be earning. Here’s how to think through whether it’s still worth it to pay with a credit card if there’s an extra fee to do so.

Related: Your guide to paying college tuition with a credit card

But for example, let’s say you pay $1,300 per month in rent. If your landlord charges a 4% fee for using a credit card, you’d effectively pay $1,352 instead. If a credit card — like the Venture card — offers 2 miles back on all purchases (as rent is not a bonus category on any card), you’d be getting 2,678 miles back. Since TPG values Capital One miles at 1.7 cents each when transferred to travel partners (not provided by issuers), you’re looking at around $46 in value in rewards. In this case, the added fee is not worth the rewards by itself.

However, if you are working towards a spending minimum for a sign-up bonus or desperately need additional miles for your award travel, it can make sense in limited situations even with a fee.

Bottom line

Before putting all of your monthly bills on a credit card, you’ll want to make sure you’re not going to be charged any additional fees for doing so. Or, if you will be charged fees, be sure you are coming out on the upside of that equation. This is most common when there’s a bonus points category involved or you’re working towards a minimum spending requirement or another perk that requires diverting a large amount of spending.

And as always, remember to pay off your balance in full and never charge more than you can afford. If you’re able to follow these simple rules, charging your monthly bills to your credit card can be a great strategy to earn lots of points and miles each year.

Related: TPG’s 10 commandments of credit cards

Featured photo by JGI/Jamie Grill for Getty Images

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