Can I use Rewards credit card to pay bills?

Bills and Rewards: A Balancing Act for Savvy Spenders

We all love earning rewards, whether it’s cash back, travel points, or exclusive perks. Using a rewards credit card to tackle everyday bills like utilities, rent, or phone bills can seem like an easy way to rack up points. But before you dive into this rewarding strategy, it’s crucial to approach it with a discerning eye.

While the idea of earning on essential spending is tempting, a hidden danger lurks: fees. Many companies, from landlords to service providers, slap on a “convenience fee” for the privilege of paying with plastic. These fees can range from a small percentage to a flat rate, and often, they’re high enough to completely negate any rewards you might earn.

Here’s what you need to know to strike the right balance:

1. Do Your Research: Don’t assume you can use your card everywhere. Before you even attempt a payment, contact the company and ask:

* **Do you accept credit card payments?** 
* **Is there a fee for using a credit card?**
* **What is the fee amount or percentage?**

2. Crunch the Numbers: Once you know the fee, compare it to your potential rewards.

* **Example:** If your card offers 1% cash back and the fee is 2.9%, you'll actually be losing money.

3. Explore Alternative Payment Options: If fees are a deal breaker, consider these options:

* **Bank Transfers:** Many companies offer free bank account transfers, ensuring your payment goes through without extra charges. 
* **Debit Cards:** While they don't earn rewards, debit cards typically have lower or no fees compared to credit cards.

4. Maximize Your Rewards Strategically:

* **Focus on Fee-Free Payments:** If some companies don't charge fees, prioritize using your rewards card for those bills.
* **Leverage Sign-Up Bonuses:** Aim to meet minimum spending requirements for sign-up bonuses by strategically using your card for bills (where fee-free).

The Bottom Line: Using a rewards credit card to pay bills can be advantageous, but only if you do your homework. Avoid falling into the fee trap by carefully researching your options and choosing the payment method that maximizes your financial gain. Remember, a little due diligence can go a long way in making your rewards strategy truly rewarding.