Paying a bill with a credit card means charging the bill amount to your card instead of paying with cash, check, or bank transfer
Most billers — utilities, insurance companies, phone providers, medical offices — let you pay by credit card, either online through their website, by phone, or in person. The charge posts to your credit card account like any other purchase. You then pay your credit card bill on its due date, just as you normally would.
The key difference from other payment methods is that you are borrowing from your credit card issuer to cover the bill, and you will owe interest if you do not pay the full card balance by the due date. Some billers charge a fee (usually 2 to 3 percent) for accepting credit card payments, though many do not.
Key Takeaways
- Paying a bill with a credit card creates a charge on your card that you must pay back by your card's due date to avoid interest.
- Many billers charge a processing fee of 2 to 3 percent when you pay by credit card, so check before you commit to this method.
- Paying bills with a credit card can help you earn rewards points or cash back, but only if the fee (if any) does not eat up the benefit.
- Using a credit card to pay bills you cannot otherwise afford is a sign of cash flow trouble and will cost you more in interest than the original bill amount.
Where you can and cannot pay bills with a credit card
Most large billers accept credit cards: electric and gas utilities, internet and phone providers, insurance companies, property tax offices, and hospitals. Smaller providers — local plumbers, independent contractors, some medical practices — may not have the infrastructure to process card payments and may only take checks or bank transfers.
The easiest way to find out is to look at the biller's website or call their payment line. Many websites show payment method icons (Visa, Mastercard, American Express) near the payment button. If the website does not list credit card as an option, ask whether they accept cards by phone; some billers will process a card payment over the phone even if their website does not offer it.
One major exception: you cannot pay federal income taxes, state income taxes, or most property taxes with a credit card without using a third-party payment processor, and those processors charge 1.87 to 2.5 percent fees. Paying taxes this way is rarely worth the cost unless you are earning rewards that exceed the fee.
Processing fees and when they apply
A processing fee is a charge the biller passes to you for accepting your credit card. It is usually 2 to 3 percent of the bill amount. Not all billers charge this fee — many utilities and insurance companies absorb the cost themselves — but you should always check before you pay.
The fee appears either as a separate line item on your receipt or is added to the amount you are charged. For example, if your electric bill is $100 and the biller charges a 2.5 percent fee, you will be charged $102.50 to your credit card. That $102.50 is what you owe when your credit card bill arrives.
To find the fee, look for a link that says "payment methods" or "how to pay" on the biller's website. Some billers list the fee right there; others only disclose it after you enter your card details. If you cannot find it online, call the biller's payment line and ask directly.
How paying with a credit card affects your credit score
Paying a bill with a credit card does two things to your credit score: it increases your card's balance (which can lower your score if your balance gets too high), and it counts as a purchase on your credit report.
Your credit score is partly based on your credit utilization ratio — the percentage of your available credit you are using at any given time. If you have a $5,000 credit limit and you charge a $1,000 bill to your card, your utilization jumps to 20 percent. Credit scoring models penalize high utilization, so if you are already using a lot of your available credit, adding a bill payment can hurt your score.
The damage is temporary: once you pay off the card balance, your utilization drops and your score recovers. But if you regularly pay bills with a credit card and carry a balance, your score will stay depressed as long as the balance is high.
When paying a bill with a credit card makes financial sense
Paying a bill with a credit card makes sense in two situations: when you earn rewards that exceed any fee, and when you need a few extra days to gather cash.
If your credit card offers 2 percent cash back and the biller charges a 2 percent fee, you break even — the reward covers the fee. If the biller charges no fee and you earn 2 percent back, you come out ahead by the reward amount. But if the biller charges 3 percent and your card earns 2 percent, you lose 1 percent of the bill amount. Always do the math before you pay.
The second situation is timing: if you have the money in your bank account but your paycheck does not arrive until after the bill is due, charging the bill to your card buys you a few days. Your credit card payment is not due for another 20 to 30 days, so you have time to deposit your paycheck and pay the card. This only works if you actually have the money coming in; if you are using the card because you do not have the cash, you are borrowing at credit card interest rates, which are usually 18 to 25 percent.
The cost of carrying a balance after paying a bill with a credit card
If you pay a bill with a credit card and do not pay off the full card balance by the due date, you will owe interest on the entire balance, including the bill amount you charged.
Credit card interest rates vary by card and by your creditworthiness, but the average is around 20 percent per year. That means if you charge a $500 bill to your card and carry a balance for a month, you will owe roughly $8.33 in interest on top of the $500. Over a year, that $500 bill costs you about $100 in interest alone.
This is why paying bills with a credit card only makes sense if you plan to pay off the card in full by the due date. If you are using the card because you cannot afford the bill, the interest cost will make your financial situation worse, not better.
How to set up automatic credit card bill payments
Many billers let you set up automatic payments so your credit card is charged on the same day each month. To do this, you usually log into the biller's website, go to the payment or account settings section, and select "set up automatic payment." You will enter your card number, expiration date, and billing address, then choose the date you want to be charged each month.
Automatic payments are convenient, but they also mean you need to remember to pay your credit card bill on time. If your credit card due date is before your automatic bill payment date, you could end up paying the bill late and owing a late fee. Check your calendar and make sure the timing works: ideally, your automatic bill payment should post to your card at least a week before your credit card due date, giving you time to pay the card.
You can also cancel automatic payments at any time by logging back into the biller's website or calling their payment line. If you do cancel, make sure you have a plan to pay the bill another way, or you could miss a payment.
Frequently Asked Questions
Can I pay my credit card bill with another credit card?
Most credit card issuers do not let you pay your bill with another credit card. They only accept payments from a bank account, check, or wire transfer. If a third-party service offers to let you pay a credit card with another card, they are charging a fee — usually 3 to 5 percent — and it is almost never worth it.
What happens if the biller charges my card twice by mistake?
Call the biller immediately and ask them to reverse the duplicate charge. Most will do so within one to three business days. If they do not, contact your credit card issuer and file a dispute; the card issuer can reverse the charge while the dispute is being investigated.
Does paying a bill with a credit card count toward my minimum payment?
No. Paying a bill with a credit card adds to your credit card balance; it does not reduce it. You still owe your full minimum payment (or full balance, if you want to avoid interest) by your credit card due date.
Can I use a debit card to pay a bill the same way as a credit card?
Yes, most billers accept debit cards. The main difference is that a debit card charge comes directly out of your bank account, so there is no balance to pay later and no interest. However, debit cards do not earn rewards, and you lose the float time that a credit card gives you.
What if I want to dispute a bill I paid with a credit card?
Contact the biller first and ask them to reverse the charge or correct the error. If they refuse, contact your credit card issuer and file a dispute. The card issuer will investigate and can reverse the charge while they do. This process usually takes 30 to 60 days.