Working hard in the background...
Working hard in the background...
Abid Salahi
Author5 min read
Today you're going to see why paying your bills using a credit card is an excellent choice.
Why?
For starters, because you can earn a lot of cash back and points.
Specifically, I'll show you the advantages of paying bills from credit cards and how to maximize them!
But first
The list of bills that can be paid via credit cards is growing year by year.
Some of the most common ones that may accept credit cards are:
One thing to note is that not all businesses accept credit cards for bill payments.
Make sure to check that the bill you are trying to set up credit card bill payments for accepts your card type (Visa or Mastercard or Amex).
For instance, the payment options for a Costco membership bill are limited to Visa and Mastercard only.
Now that you have a list of bills in mind...
There are 3 simple reasons to do so:
Almost all credit cards come with some form of cash back or points that can be earned.
In comparison to doing bank transfers or sending cheques, I think it's a much better deal.
Your bill payments can add up to a lot over time.
So why not maximize your rewards by using the right credit cards to pay them off.
Imagine all the travel points you could earn by just simply paying your bills every month.
Now you're probably wondering... which credit card will give you the most reward for recurring bill payments? We go into great detail about this question in best credit card for recurring bill payments if you are interested to know more.
Want to earn $1,000 MORE in credit card rewards?
Grab your free guide to learn how to maximize the credit card rewards you earn
But for now, here are 2 of your best options:
go to Tangerine's website
I currently have or may soon have a Tangerine Savings account
Welcome Bonus
10% Cash Back up to $100 value
Annual Fee
$0
Interest Rates
20.95%* / 22.95%*
While we think Tangerine isn't the best single credit card to own, it's still a valuable card to have in your arsenal for maximizing your rewards. It offers one of the highest cashback rates for pharmacy and recurring bill payments, areas where your other credit cards might not provide significant rewards. This card only requires a Fair credit score, making it an excellent choice for people who don't have a high credit score yet.
Pros
Cons
Rewards
Insurance
Coverage
Purchase Protection
Extended Warranty
Eligibility
Credit Score
Annual Income
The Tangerine Money-Back Credit Card offers up to 2% in cash back rewards on 3 categories of your choice without any particular limits.
You can choose "Recurring Bill Payments" as one of your chosen categories and earn 2% every time you pay a pre-authorized bill.
And what makes this car even better is that it comes without an annual fee.
However, do you prefer a more premium credit card instead with a higher cash back rate?
go to Scotiabank's website
Welcome Bonus*
10% Cash Back (up to $200 value)
Annual Fee*
120 $0
Interest Rates
20.99% / 22.99%
The 4% cashback offered on groceries and recurring purchases is the highest among all other credit cards. With the first year's annual fee waived, and with the right transactions used on this credit card, a high amount of cashback could be earned.
Pros
Cons
Rewards*
Insurance*
Coverage*
Mobile Device Insurance
Travel Accident
Emergency Out of province Medical
Trip Interruption
Trip Cancellation
Flight Delay
Lost or Stolen Baggage
Baggage Delay
Car Rental Damage & Theft
Purchase Protection
Extended Warranty
Benefits*
Details*
Car Rental Discount
Visa Infinite Exclusive Benefits
Eligibility*
Credit Score
Annual Income
The Scotia Momentum Visa Infinite Card comes with a whopping 4% cash back on all your recurring bill payments and subscriptions.
So, for example, if your total monthly bill amount was $500, you'd save $20 just by using this card.
Not to mention that the 4% cash-back rate also applies to your grocery purchases!
This credit card also comes with fantastic travel insurance coverage if you travel frequently.
However, to qualify for this credit card, you'll need to have a minimum individual income of $60,000 or a household income of $100,000.
So make sure you can qualify before you apply for it!
Most bills can be set up to be taken care of as pre-authorized payments using credit cards.
These will be done on a specific day of the month based on the billing company's scheduling.
This will help you avoid any late fee payments and save you a ton of time and energy.
I call it the set it and forget it strategy since you won't have to worry about it every month.
Do you also find tracking your bills and expenses a challenging task?
But if all your bills went through a credit card, you'll have a much easier time looking over your monthly statements and tracking them alongside other expenses.
All your bills in one place would create a more organized system.
It will also help you manage your finances more efficiently and have more control over them.
This all sounds really great, but...
There are 2 key things to pay attention to when paying your bills from credit cards:
Some credit cards may treat a bill payment as a cash advance instead.
Cash advances usually incur either a flat fee or percentage of the transaction which in turn is subject to a higher interest rate that goes in effect immediately.
In these cases, avoid credit cards with hidden fees and switch to ones that won't charge you a fee or damage your credit score.
Credit utilization is an essential contributing factor to your credit score.
In simple terms, it measures how much of your total credit limit is currently being used.
The optimal ratio to keep your utilization at is 30% or lower.
Investopedia shows a great example of how to calculate your utilization.
I mention credit utilization because your monthly expenses can vary month to month while your recurring bill payments might remain the same.
That means you need to ensure your pre-authorized bills don't exceed your credit limit and account for your varying expenses.
So let's summarize what we just learned.
If you have any bills that accept credit card payments, make sure to either manually pay them using your credit card or setup pre-authorized payments.
Check for any hidden fees your credit card may charge you for before you pay any bills.
Keep track of your monthly bills and expenses, and do not over-utilize your credit cards to maintain a good credit score at all times.
Let me know in the comments if this was helpful!
Scotiabank Passport® Visa Infinite* Card
BMO VIPorter World Elite Mastercard®∗
Scotia Momentum® Visa Infinite* Card
BMO VIPorter Mastercard®∗
Scotiabank Value® Visa* Card