You Can Benefit by Paying Monthly Bills with a Credit Card

Credit cards can be used for a variety of purposes - from making a large purchase, such as a washing machine, to buying airline tickets for a holiday to France. But can you use credit cards to pay your monthly bills? Because of all the rewards that you stand to earn, it can be quite tempting to put all your monthly obligations, such as cable bills, utilities, rent and insurance on your card. Nevertheless, while doing so, you should make sure that the pros outweigh the cons.

As mentioned earlier, the most obvious advantage of using a credit card to pay monthly bills is all the perks you can rack up. Depending on the card you own, your issuer may reward you in the form of travel miles or cash back, which can translate into a huge amount of savings. Moreover, by using a card, you can do away with the hassle of making multiple payments – this is because by setting up automatic payments, you can consolidate several obligations into a single one. Additionally, using a card gives you the opportunity to build credit, and also keep old cards active by using them at regular intervals. Most issuers tend to close cards which haven’t been used for a long time – this can have a negative impact on your score by lowering the age of accounts or by decreasing the amount of credit available to you. Finally, if you use your card to pay monthly bills, there’ll be less balance available for you to splurge on impulse buys or items that you don’t really need. Thus, if you keep your limit low and spend it on monthly obligations, you’re less likely to purchase a big ticket item simply because there’s enough balance to enable you to do so.

Having said that, it’s also easy to misuse your credit card while paying off monthly bills. To avoid this, make sure you keep the following points in mind.

Begin with a zero balance and pay off your balance in full

This is important to ensure that you don’t pay interest on accrued balances. If you start with a zero balance, you can take advantage of the card’s grace period to avoid paying interest on purchases. And as long as you pay off your balance in full at the end of each month, you won’t accrue interest on unpaid amounts.

Use a Single Card

It is important to keep track of expenses and stick to your budget while using a credit card. Doing so becomes easier if you have a single card to manage, instead of multiple cards.

Keep an Eye on Available Credit

Make sure you have enough available credit to pay all your bills and avoid a situation where you end up exceeding your limit, as it can have dire consequences. If required, free up credit by making additional payments on your card throughout the month.

Steer Clear of Convenience Charges

Many issuers charge convenience fees for granting you the facility of paying with a credit card. This is often something like $2 - $4 per transaction. If you are paying multiple bills, the costs can really add up, outweighing any rewards that you may stand to earn. If that’s the case, a better option would be to use your checking account for the transaction instead.

Make Sure You Have Enough Balance in Your Checking Account

Using credit cards to pay bills is not an excuse to splurge with the money in your checking account, as you’ll need it to pay off your credit card bills in full when they are due. Not doing so could have you accrue interest on your balances, and also get you into debt.

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