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Which Bills Should You Pay (or Not) With a Credit Card?

8/3/2021

If you are like many people, you use your credit card for daily purchases. They’re convenient and secure, can help you build your credit history, and can make budgeting easier. Often, they also offer rewards, like SLFCU’s Visa Signature® and Visa Platinum® Rebate cards, which offer cash back on purchases.

For these reasons, personal finance companies such as NerdWallet recommend paying with a credit card when possible.1 However, before you pull out your card or tap to pay, consider the potential pros and cons of paying your bills with credit. Read on for some tips.

DAY-TO-DAY PURCHASES

If you routinely pay for expenses such as dining out, online shopping, or groceries with your credit card, you can rack up those rewards – but make sure you have a plan to pay your balance in full each month. Making only the minimum monthly payment can be tempting, but that, combined with making too many purchases on your card, can cause ‘credit creep’, where your balance grows each month and the interest piles up.

LARGE PURCHASES

Thinking about putting a large purchase on a credit card? Personal finance experts recommend you only do this when you know you can afford to pay off the balance in a timely fashion. When a large purchase sits “unsettled” on your card, you’ll not only be hit with interest, but you could also wipe out your available credit limit. Your credit utilization rate is an important factor in determining your credit score, too. If one or more of your cards is maxed out, you’ll see a negative dip on your report until those balances are free again.2

MONTHLY “NON-DEBT” BILLS

SLFCU pays up to a 1.5% monthly rebate on all purchases made with its credit cards, so if you typically pay off the entire balance each month, it could make sense to use it to pay for utilities, internet or streaming services, cell phone, auto insurance, and other non-debt monthly bills. You’ll rack up reward dollars on bills you have to pay anyway, and it’s convenient to have your entire spending record in one place. You can track your purchases in online or mobile banking, so you can easily review when you paid your bills.

Check your payment agreements to see if you’ll be charged any fees for using a credit card to pay, as they could wipe out the value of rewards you accumulate. And remember: you should only pay by credit card if you use your card responsibly and can pay off the entire balance each month. The last thing you want is to have to pay interest on a utility payment you made six months ago.

Looking for a great low-rate rebate card? Check out SLFCU’s options at slfcu.org/CreditCards.


1. NerdWallet, 6/17/21 (nerdwallet.com/article/credit-cards/why-every-purchase-should-be-on-a-credit-card)
2. CNBC, 6/7/21 (cnbc.com/select/expenses-never-put-on-credit-card)



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