How to choose the right credit card to use for your utility bills
When it comes to choosing a good credit card to use for your bill payments, consider the card’s rewards rate and offer terms, like any spending limits or intro APR details.
Rewards
Don’t choose a card to pay utility bills that doesn’t reward you enough to cover any convenience fees. For example, if your utility bill is $100 and your provider charges a 4% fee (i.e. $4) to pay via credit card, you’ll want to make sure the card you use offers at least the same or better in rewards (a card earning 5% would be great here). If not, then you could be losing money on the transaction.
"It’s quite common for fees to be added when paying [your utilities] via credit card," Reese said. "If [there is a fee], be sure the value of the rewards you earn is greater than the cost of the fees."
Additionally, you’ll want the rewards to complement the rest of your regular spending. If you have to overspend or buy things you normally wouldn’t to earn rewards, the card is probably not right for you.
Lastly, check if the card has any spending limits on its reward categories. Some credit cards offer high rewards rates, but they might limit the total rewards you can earn within a billing cycle, quarter or year. If your bill payments are going to cause you to hit that limit sooner than you’d like, you may want to consider another option.
Introductory APR
Check how long a card’s introductory period is. Most range from nine to 21 months, depending on the card, so choose the one that offers enough time for you to get your finances on track.Â
To figure out how much time you need to pay off a balance, divide the card balance by the number of months in the promotional period. That number will be the minimum amount you need to put toward the balance each month to pay it off in time.
How to get the most from your credit card
Set up automatic payments for your utility bills. By using autopay, you can avoid paying fees for missed or late payments.
The simplest way to get the most from your credit card is to pay your bill in full each month. If you don’t carry a balance, you won’t incur any interest charges, which means the rewards you earn on your spending will go directly into your pocket. If you carry a balance from month to month, interest charges could wipe out any value you’d get from your rewards.
Alternatives to using a credit card for your utility bill
You could always pay by check, debit card or by using bill pay through your bank. None of these options likely incur an extra fee, and there are some debit cards, like the Discover Cashback Debit Account, that offer rewards. Debit rewards won’t be as high as what you’d earn from using a credit card, but it’s better than nothing.
You can set up bill pay so that your bank sends a payment to your utility or rent provider on whichever day you request. Automating the process reduces the chances of missing payments, and you won’t have to pay convenience fees.
How to apply for a credit card
Follow these simple steps to apply for a credit card:
- Find the credit card that best fits your spending habits. In this case, make sure it either earns a good flat rate for all purchases or it features a bonus category for bill payments.
- Apply securely on the credit card issuer’s website. You’ll need to provide financial and personal information including your name, address, income, Social Security number and monthly rent or mortgage payments.
- You’ll either hear back instantly with the card issuer’s decision or the issuer may reach out for clarification or to gather more information.
FAQs
If you want to earn more rewards, build your credit or get some extra time to cover the cost, using a credit card for your utility bills could make sense. But be aware of any fees your utility provider might charge and understand that you need to pay off your full credit card bill by the due date to avoid interest charges.
A convenience fee for using a credit card to pay your utility bill could be a flat fee, a percentage of your bill or a combination thereof, but it’s typically a few dollars per transaction. For example, a company may charge a flat rate of $4 for using a credit card to make a payment less than $300, and then $4 for each $300 payment increment thereafter.
Other credit cards we researched
Our methodology
CNET reviews credit cards by exhaustively comparing them across set criteria developed for each major category, including cash-back, welcome bonus, travel rewards and balance transfer. We take into consideration the typical spending behavior of a range of consumer profiles -- with the understanding that everyone’s financial situation is different -- and the designated function of a card.
*All information about the Venmo Credit Card and the BankAmericard credit card has been collected independently by CNET and has not been reviewed by the issuer.
