Should You Pay Bills With a Credit Card? - NerdWallet Canada (2024)

FAQs

Should You Pay Bills With a Credit Card? - NerdWallet Canada? ›

Be aware of any convenience fees you'll incur by paying your bills with credit cards. It's best to use credit only for products and services that won't charge a fee, and using cash, debit or bank transfer for the rest. And, of course, use a credit card only if you know you can pay off the balance each month.

Paying bills with a credit card in a nutshell

Some downsides could include extra fees or interest charges. Benefits could include increased payment flexibility and the opportunity to earn more rewards points. If you can do it responsibly, you might find that paying bills with a credit card is a good choice for you.

Using Plastiq (opens in a new tab), a third party online payment service, you can pay your utility bill using major credit cards such as Visa, MasterCard and American Express. Allow a minimum of three to six business days for us to receive the payment.

In general, NerdWallet recommends paying with a credit card whenever possible: Credit cards are safer to carry than cash and offer stronger fraud protections than debit. You can earn significant rewards without changing your spending habits. It's easier to track your spending.

Use the credit card instead of cash wherever possible. Credit card issuers typically charge fees for international transactions and you may get the best exchange rate and fees lower than those associated with exchanging cash.

Loans, like mortgages, are unlikely to be able to be paid with a credit card. If they can, they charge a significant processing fee. This fee will be much greater than any cashback you earn.

But credit card issuers might classify other transactions as cash advances, like these: Peer-to-peer (P2P) money transfers through apps like PayPal and Venmo. Monthly bills paid with a credit card. Other types of debt including auto loans paid with a credit card.

Many utility providers allow you to pay your monthly bill with a credit card, but you may have to pay a convenience fee. And if you're trying to maximize your rewards earning, the higher your utility bill is, the more advantageous it becomes to pay by credit card — especially with a flat convenience fee.

Monitoring your payment history

Your payment history is the most important factor for your credit score. To improve your payment history: always make your payments on time. make at least the minimum payment if you can't pay the full amount that you owe.

While many credit card issuers only offer 1% back, some offer up to 5% , so if you choose to pay bills with a credit card to get cash back, choose the card you use wisely. Tracking your spending is easy. Many credit card companies provide you with free reports that divide your charges into spending categories.

When should you not use a credit card? ›

Making the minimum payment on your credit card will keep the account current and in good standing. But consider paying off as much of your balance as you can each month. The lower your balances, the better your credit health.

When it comes to paying off a credit card, you're better off doing so after every purchase than the alternative — missing payments and collecting interest. However, if it's possible to do so, try ensuring that you have a balance that hits your statement every month.

Only 13 per cent report having gone completely cashless. Despite more than half of Canadians (55 per cent) who say they have no desire to go cashless, 49 per cent think it is likely that Canadian stores will go completely cashless in the next 10 years compared to 31 per cent who think it is unlikely.

Debit and credit cards are Canada's most common ways to pay for things. Major networks like Visa, American Express, and MasterCard are generally accepted.

Credit cards offer valuable benefits for both consumers and retailers. And the majority of Canadians use their credit card as a method of payment rather than a means of borrowing. A credit card is a convenient and flexible payment tool accepted in more than 200 countries and at millions of locations worldwide.

One way of making sure you never miss payments on monthly bills like your gym membership or video streaming service is to get them all automatically paid with your credit card. You can also earn reward points in the process, if your credit card offers that benefit.

If you're new to credit, putting one or more monthly bills on a credit card can help build a positive credit history; just make your credit card payments on time.

Payment history isn't the only thing that affects credit scores (more on that later), but people who pay their debts on time tend to have higher credit scores than those who sometimes make late payments.

Does paying a bill with a credit card count as a purchase? In most cases, yes. Always check with the company that issues the credit card to be sure. However, most cards view bill payments as transactions.