Paying bills with a credit card can be a savvy financial move—if you play it right. More than half of renters today pay online using digital payment options, including credit cards [1]. When done wisely, paying with a credit card can lead to some major perks like free flights or hotel stays. Here’s a breakdown of what to consider when you’re thinking about charging your upcoming bills to a credit card.
What is the fee structure?
When does it make sense to use a credit card for bills? First, consider the fee structure. If the fee is low enough—typically under 2%—and your card offers valuable rewards like travel points or cash back, you might come out ahead. The reality is that many places charge around 3% or more for paying bills like rent or tuition. So, if your card only gives you 1% or 2%, you’ll end up paying more in fees than you’ll get back in rewards.
Some landlords may charge you a flat fee for credit card payments. For instance, if they charge you a $50 fee on $2,000 rent, that’s a 2.5% fee. One notable exception is the Bilt Mastercard, which waives fees on rent payments, making it a great choice for maximizing rewards. I’ve personally used the Bilt card to pay for rent and have accumulated enough points for first-class flights. Click here for a referral code to the Bilt Mastercard.*
Can you pay the balance in full each month?
This is the most critical factor: always make sure you can pay off the full balance each month. I can’t stress this enough. Carrying a balance means high interest (around 25%, as of August 2024), which will quickly wipe out any rewards you’ve earned. The key to winning with credit cards is to avoid paying interest altogether by paying your full balance monthly.
Are there any special incentives?
Before you swipe, make sure the rewards are something you’ll actually use, like travel or cash back. And once you’ve decided on a credit card, see if the issuing bank or partner airline offers special incentives like sign-up or transfer bonuses. Many cards offer lucrative rewards for spending a certain amount within the first few months.
Some cards are linked to specific hotels or airlines, while others offer broader rewards (as of August 2024):
- Capital One Venture Card: Earn 75,000 miles after spending $4,000 in the first 3 months, plus $250 credit toward Capital One Travel.
- American Express Gold Card: Earn 60,000 points after spending $6,000 in the first 6 months, plus 20% on restaurant spending (up to $100).
- Chase Sapphire Preferred / Reserve: Earn 60,000 bonus points after spending $4,000 within the first 3 months on either card. Click here for a referral code to either Chase Sapphire card.**
Also, look out for point transfer bonuses that can help you maximize your rewards when redeeming through partner airlines or hotels. Sometimes credit cards give you boosts for transfer at various times of the year, which can stretch your points even farther. As always, do the math first to make sure it’s truly worth it.
Final Thoughts: Smart Credit Card Use = Big Rewards
Paying bills with a credit card can help you rack up rewards, but only if the fees make sense and you can pay off the balance. Balancing the rewards you earn against the fees you pay is key to enjoying the benefits without losing money to interest or charges. With smart use, those everyday expenses could turn into your next vacation.
>> If you’re interested in learning more about how to use your credit card wisely, check out our 5 Tips for Managing Your First Credit Card.
*Bilt Mastercard referral code: JKA8-R31I (link). Disclaimer: I may receive Bilt Rewards points if you are approved for the Bilt Mastercard. **Chase Sapphire referral (link).
**Disclaimer: Earn 60,000 bonus points with either Chase Sapphire card. I can be rewarded if you apply here and are approved for the card.
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