Should You Pay Utility Bills Using A Credit Card?
Credit Cards have made it easier for credit cardholders to borrow funds whenever required. You use a credit card from paying rent to insurance money. After learning about the advantages of a credit card you must be thinking of using it to pay the utility bills. All the questions like whether it is right to pay the utility bills using a credit card, how it works, will you earn any reward points on the utility bill payment, etc. must be arising in your mind. No need to worry about this, all your questions will be answered in this article. Keep reading to know whether paying utility bills with a credit card is worth it not?
Do I earn rewards on paying utility bills?
Neither you earn reward points on all credit cards on making the utility bill payment nor do all credit cards provide the same reward points on this transaction. You need to see which credit card provides the highest rewards on utility bills before applying for a credit card. Also, you need to figure out which utility transactions are worth it.
After receiving the credit card you need to register for the net banking services not only for the utility bills payment but for other endless services. After registering for the net banking services you need to log in using your user id and password. Now, under the billers category choose from the provided utility service providers like gas, telephone, electricity, DTH, insurance, etc., and proceed to pay the bill.
You can only make the payment of those utility bills whose utility service provider is enlisted in the bank’s list. Mostly you earn more reward points on making the payment of insurance premiums.
Different card issuers provide different reward programs. You can either earn cashback or reward points per statement cycle. You can also set the maximum limits on your bills.
Register for Standing Instructions for Utility Bill:
The first and foremost thing is knowing what is standing instruction. Standing instruction is just another name for auto-debit services. By registering for the auto-debit services you do not have to remember the due dates of your utility bills like rent, insurance premium, etc. On the due date, the amount of your utility bill will be deducted from the account of the selected utility bill.
To register for this service, you can download the activation form and fill it up. After filling it you need to send the physical copy through the speed post to the respective bank. You will receive the notification of auto-debit service activation through an SMS on your registered mobile number.
When does utility bills payment through credit cards make sense?
When you want to earn more reward points, then you can use the credit card to make the utility bills payment through the credit card. You get to earn reward points every month on the utility transactions.
When you want to pay certain bills like insurance premium, rent, etc. which are recurring on a monthly basis through auto-debit services. So, you do not default on their payments and can keep using a credit card without having to worry about keeping reminders.
When you want to track your spendings. Credit cards are a great way to track your spendings. This way you can stick to your budget and do not overuse a credit card. You will have more control over the credit utilization ratio.
It is more convenient to pay utility bills through credit cards. You do not have to go to the service providers to clear the dues. With credit cards, you can clear the utility bills from your home using the online payment method.
When does utility bills payment through credit cards not make sense?
You should avoid making utility bills paid through a credit card when you do not earn rewards in returns instead you are being charged with the processing fees. This will only increase your expenses.
When you are already struggling with debt, then you should avoid paying the regular bills with credit cards as you are adding on more to the debt.
You are unable to clear the credit card bills in full, in such circumstances you should avoid using a credit card for the utility bills payment. You are already struggling to pay the credit card bills and making utility bills payment will create a more problematic situation for you. You will have more debt.
You should totally avoid paying the utility bills with credit cards when you are an overspender. You can not go crazy with credit card usage. If you cannot stop yourself from overspending then a credit card is not the right option for you as the chances of you landing up in a debt trap are pretty much high.
Best credit cards for utility bills are:
Here are the 4 credit cards that you should consider for the utility bills payment:
Bottom Line:
To conclude, certain things that you need to keep in mind while paying the utility bills through a credit card are that you must use the right credit card which provides rewards on the utility bills, you need to keep a watch on your savings/current account in order to clear your credit card bills, and use the credit card does not charge a processing fee on the utility bill payment. The next question that comes to one’s mind is does utility bills payment affect your credit score? Yes, it can either help in building a credit score or can have a negative impact on it. You analyze whether paying utility bills with a credit card makes sense or not.
Paying some of the utility bills with a credit card can still make some sense as your spendings will be under control. Keep a track of your credit utilization so that you do not use a credit card beyond the pre-approved limit. Use a credit card wisely in order to derive the maximum benefits out of it.
Share your experience on how paying utility bills through a credit card bill helped you and what are your tips to maximize the benefits of the credit card.
Additional Reading - Credit Card Billing Cycle: Everything You Need to Know About It
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