How To Pay Utility Bill With Credit Card: A Complete Guide

Paying utility bills can be a hassle, especially if you’re busy or prone to forgetting due dates. Setting up automatic payments through your credit card can ensure your utilities never get shut off while also providing some nice perks.

After analyzing the content from [https //www.experian.com/blogs/ask-experian/can-you-pay-utilities-with-credit-card/ and https //www.chase.com/personal/credit-cards/education/basics/can-you-pay-monthly-bills-with-credit-cards] here’s everything you need to know about using a credit card to cover your utility payments.

What Utility Bills Can You Pay With a Credit Card?

Most major utility companies accept credit cards for bill payment. Here are some common utilities you can probably pay with a card:

• Electricity
• Gas
• Water
• Sewer
• Trash pickup
• Cable/satellite TV
• Internet
• Phone (landline and cell)

Always verify with your specific utility provider before setting up credit card payments. Some smaller local utilities may not take cards or may charge extra fees.

The Benefits of Paying Utilities With a Credit Card

Paying utility bills with a credit card offers several potential perks

Earn Rewards

If your credit card provides cash back, points, or miles on purchases, paying utilities with that card allows you to earn rewards on those payments. Depending on your annual utility costs, that could add up to a nice payout each year.

For example the Chase Freedom Flex card offers 5% cash back on up to $1500 in spending each quarter when you activate that category. If your quarterly utility bills total $500, you’d earn $25 back by charging them to that card.

Ensure On-Time Payment

Setting up autopay through your credit card guarantees your utility bills will be paid on time every month, preventing late fees or service interruptions. This peace of mind is especially valuable if your income fluctuates.

With autopay from your bank account, a low balance could cause the payment to fail or trigger an overdraft fee. But with a credit card, you know the payment will go through up to your available credit limit.

Simplify Disputes

If you ever need to dispute a charge on your utility bill, it’s easier to do so through a credit card compared to a bank account.

With a credit card, you can dispute the charge and withhold payment until it’s resolved. With a bank account, you must pay first and then request a refund if the dispute succeeds.

Establish Credit History

Putting a regular monthly bill like a phone plan on your credit card and paying it on time helps build your credit, which is useful for folks new to credit.

Qualify for Sign-up Bonuses

Some credit cards offer lucrative sign-up bonuses if you spend a certain amount within the first 3 months. Charging steady utility bills to a new card can help ensure you hit the target.

For example, the Chase Sapphire Preferred card gives new cardholders 60,000 bonus points (worth $750 in travel) when they spend $4,000 in the first 3 months.

Potential Downsides to Paying Utilities With a Credit Card

While using a credit card for utilities has some upside, there are a few risks to consider:

Credit Utilization Ratio

If your utility bills amount to a large chunk of your available credit each month, it could drive up your credit utilization ratio and negatively impact your credit scores.

Try to keep your total monthly charges below 30% of your credit limit on each card. If needed, split utility bills across multiple cards.

Interest Charges

If you carry a balance on the card you use for utilities, you’ll rack up interest charges each month. And credit card interest is generally very high (15-25% APR is typical).

Always try to pay your balance in full each month to avoid interest. But if that’s not possible, compare your potential rewards to your interest costs before putting utilities on a credit card.

Convenience Fees

Some utility companies tack on a “convenience fee” for credit card payments, usually 2-3%. These fees can wipe out any rewards you might earn.

Before setting up credit card autopay, ask your providers if they charge any fees. Weigh the net reward value after deducting those fees.

Step-by-Step Guide to Paying Utilities With a Credit Card

Follow these steps to start charging your utility bills automatically each month:

1. Choose a card. Pick a credit card that offers robust rewards on all purchases with no annual fee. Ideally, choose one with a high enough credit limit to accommodate your monthly utilities without pushing your utilization too high.

2. Contact utility companies. Verify with each of your utility providers that they accept credit card payments. Inquire about any convenience fees.

3. Set up autopay. Log into your online account with each utility company. Change the payment method to your credit card and enable autopay so the bill is paid automatically each month.

4. Monitor statements. Carefully review your credit card statement each month to ensure utility bills are being charged as expected without any odd fees.

5. Pay card balance. Pay your credit card balance in full each month to avoid interest charges. Set up autopay from your bank account for your monthly card payment to simplify this.

Maximize Rewards While Minimizing Risks

Here are a few final tips to use when paying utility bills with a credit card:

• Ask your card issuer for a credit limit increase to keep utilization low
• Consider paying 1 or 2 bills per card to limit risk
• Set payment due dates to align with your paycheck schedule
• Automate a full payoff from checking each month to avoid interest
• Downgrade to rewards cards with no annual fee to maximize net earnings

Used responsibly, putting utilities on a credit card can take a chore out of your hands while scoring you some free vacations, gift cards, or cash. Just be diligent about minimizing risk factors and you’ll come out ahead.