These Are the Bills You Can Put on Credit If You Need To, According to a Finance Expert
The coronavirus pandemic, though still ongoing, has already left many people in a tenuous spot with their financial situations. Whether you were laid off, furloughed, or had a salary reduction, the amount of people needing assistance has skyrocketed. And that unfortunately means many might be struggling to make bill payments from their bank accounts right now.
There is one viable option, though: Credit cards. Sure, they can come with high interest rates and be kind of a pain to keep track of for payments, but in emergency situations, they’re incredibly useful tools for paying bills that you otherwise couldn’t afford.
What bills can you put on your credit card if you need to? The short answer: All of them.
“There’s really no reason why you shouldn’t put all of your recurring bills on a credit card, to the extent that you are able to do so,” says credit expert John Ulzheimer. “You’re either going to pay them directly from a checking account or directly through an Intuit-like system anyway. So to the extent you’re going to pay it anyways, you might as well get some value out of making the payment, and the best way to do that is by putting it on a credit card with a rewards program.”
It comes with a caveat, though. You need to make sure you’re able to pay all your cards off by the end of the month. That way, you won’t accrue interest or affect your credit score, and you’ll be able to take advantage of any rewards your credit card offers. And remember you don’t have to pay it off immediately after you make that credit card payment. You’re basically giving yourself a billing cycle to spread out payments over, saving your bank account from destruction in the short-term.
Be careful, though—interest is a killer.
The very last thing you want to do when you’re paying your bills with a credit card is get into a habit of not paying the entire thing off each month. When you start missing payments, you’re paying extra in interest fees for something that didn’t have interest to begin with.
“This is when you really have to have an honest discussion with yourself about the word no one likes, which is budgeting,” Ulzheimer says. “Are you able to pay this card in full every single month? If the answer is no, that’s a math problem. You’re chewing up too much of your disposable income in your bills, which means you may need to revisit some of things you’re paying for every month and ask yourself if you really need those.”
Watch out for smaller fees.
Not every service provider accepts credit cards, and some do but charge a 3 or 4 percent fee for their processing costs. If you’re paying for big stuff—like school tuition, for example—that can end up costing you a lot of extra money.
“You have to balance whether or not paying that fee is worth whatever points you’re going to be earning [with the credit card],” Ulzheimer says.
You also need to time it right.
If you have plans to make a big purchase, like a car or a home, Ulzheimer recommends not paying your bills with credit cards for the month prior, because if you’re not careful about how you pay it off, it could affect your credit score—and in those situations, you need the best score possible.
The bottom line? If you’ve got rent, a mortgage, student loans, utility payments, or any other recurring monthly bills, get a credit card that gives you points, miles, or cash back and throw everything on there—just be sure to pay it off quickly.