When seeing credit card offers in the mail or through television, the rewards and bonus points can make many people wonder if using their credit card for bills is the best decision they could make. For example, paying monthly bills with a credit card
could mean that you earn cash back on these purchases, which does mean that in the end, for paying the bill you get something in return. But, is this a wise idea? In some situations it could work, thus it is worthy of considering.
The Benefits of Paying Bills with a Credit Card
There are benefits to paying monthly bills with a credit card. For some people the idea of these benefits is going to outweigh the cons of such a decision. The benefits are:
- If you have several bills, this could mean that you rack up rewards points that can be turned into purchases later, meaning that you get something for bills that you have to pay anyways
- For those who earn air miles, this could earn them a free trip in just a short time period, depending upon what types of bills you are paying with this
- Having one bill to pay rather than six can make life simpler. If you are paying monthly bills with a credit card, then you only have one bill that you really have to worry about, especially if you set the others up on auto pay with said credit card.
- It can help to establish your credit as someone who is worthy of lending to, especially if you pay the credit card off after each cycle so that you are not maxing out the amount of credit that you do have.
The Drawbacks of Credit Cards Paying Monthly Bills
Just like every situation, there are still some drawbacks of the decision to make payment on monthly bills with a credit card. These drawbacks include:
- At any time a credit card company can remove the rewards that you have been saving, thus meaning that you paid all those bills with the credit card for nothing.
- The credit card company may also have large restrictions on what you can and cannot use these rewards for, which makes it harder to do what you may want to do.
- Many people think that paying the bills with a credit card can make credit a slippery slope for some people. The person may then use their checking account for wants, rather than paying off the credit card balance.
- The interest on these credit cards could be harder to pay back if you do not pay on this immediately, resulting in you paying more for your monthly bills than what you had to pay, and ultimately getting yourself in a debt cycle that you cannot get out of.
- Many compensate going to charge a convenience fee when you are using a credit to card to pay a monthly bill. Thus, you could end up paying more for the bill that what you would have normally paid, just because you used a credit card and proved that you are responsible with credit.
If you are serious about paying monthly bills with a credit card, then you need to look at a few aspects of the card:
- What is the benefit of paying with the credit card?
- What type of reward are you going to qualify for and is this reward something that you want?
- Do you get charged fees for reoccurring monthly payments on this card?
If you find that the credit card is going to charge you fees, is this going to cancel out the rewards that you are getting? The idea is to only use paying monthly bills with a credit card when you are sure that you are getting more for doing this. If there is no actual reward, once fees are in place, then you are usually paying more just to do this.
So is utilizing a payment of monthly bills with a credit card the best decision? This is going to greatly depend on the type of credit card that you have and whether you are getting extra benefits or not in doing this. There are several people who do this, though those who do often pay their balances in full each month in order to avoid interest rates. If you are doing this as a way to save money, you would not be saving money by letting the interest rate tack on more fees. The decision is up to you, however, be sure that you carefully consider every possible situation that could occur with the use of your credit card as the way to pay your regular bills. Otherwise, you could find yourself in a situation that requires more time and energy that what you ever imagined in order to get out of the debt cycle.