Should You Pay Bills With a Credit Card?

Ever wondered if you can pay your bills with your credit card? Maybe you’re hoping to earn some extra points or rewards, or maybe you just don’t have the cash handy when your bill comes due.

In many cases, yes, you can pay bills by credit card. While there are a few things to be aware of, paying by credit card can be an easy way to manage your bills.

How do I pay bills with my credit card?

Many companies accept credit cards for bill payments, whether you pay in person, over the phone or online.

If it’s in person, you’ll simply tap, insert or swipe your credit card like you’re making a purchase.

Over the phone, you’ll tell them your credit card details (number, expiry date and the security code on the back).

Online, you’ll usually see a payment option that asks how you would like to pay. Choose “credit card,” enter your credit card information, and click “confirm” to complete the transaction.

You can also set up credit card autopay for monthly bills or to use a credit card authorization form if the business allows it to enable future charges of recurring bills, such as your cell phone bill. In this scenario, the bill will be automatically charged to your credit card every month (or whatever the billing period is).

Paying by credit card in any of these ways means the charge shows up on your credit card statement. You can pay it off in the next billing cycle.

Nerdy tip: The key is to avoid interest by paying your statement balance in full by the due date — otherwise the interest can cancel out your rewards and put stress on your budget.

What types of bills can I pay with a credit card?

These days, you can pay most bills with a credit card. Some of the most common types of bills that accept credit card payments include:

Keep in mind that some businesses won’t accept credit card payments, and some only accept certain credit cards. For example, Costco warehouses in Canada only accept Mastercard for credit card purchases (Costco.ca also accepts Visa for online purchases).

Some businesses offer the option to pay bills by credit card but charge an extra fee. Make sure you’re aware of how these costs might add up beforehand, so there are no surprises when you see the final payment total.

You also need to be mindful of how a business treats the credit card transaction. If they classify it as a cash advance or “cash-like” transaction. That can mean extra fees and interest that starts right away.

» MORE: How to pay rent with your credit card

Can I use a credit card to pay my taxes?

Yes, you can pay your taxes with a credit card, but it’s not recommended. That’s because you will have to pay through a third-party service provider, which will charge a fee, usually a percentage of what you owe. Also, the Canada Revenue Agency (CRA) does not accept credit card payments.

Instead, it’s best to save for taxes throughout the year, so you can just pay the CRA directly from your bank account.

Pros and cons of using a credit card to pay bills and taxes

Pros

Cons

Paying your bills with a credit card can make your life easier and help you build credit if you pay off your balance each month. Plus, if you use a rewards credit card, you can earn rewards faster than you might otherwise.

However, credit cards also have high interest rates, so you need to make sure you’re still spending responsibly. Remember that interest can be expensive, and even rewards won’t make up for it.