Using credit cards to pay bills - advantages? does it improve scores?

[hapagrrl]

Hi - I don't know where I heard it, but I only recently learned that some (or a lot?) of people pay their monthly bills with their credit cards, then simply pay those balances off each month.  Does anyone here do that? Can you explain it to me, including the benefits of doing this? does it help increase credit scores at all?  I'm very curious to know how it all works!

[Anonymous]

And adding to the OP: what kind of websites do you guys use for paying rent, etc with the lowest fees?

[SunriseEarth]

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@hapagrrl wrote:

Hi - I don't know where I heard it, but I only recently learned that some (or a lot?) of people pay their monthly bills with their credit cards, then simply pay those balances off each month.  Does anyone here do that? Can you explain it to me, including the benefits of doing this? does it help increase credit scores at all?  I'm very curious to know how it all works!

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It's fairly common here.  One benefit of this is the rewards programs offered for credit card use, such as cash back.  Since you have to pay the bills, anyway, you can earn more CC rewards by using the cards.   Some also find it more convenient to make one payment to the CCC, instead of several separate payments to each bill collector.  And certainly, there can be score benefit from a proper use of your available credit, so long as you're not posting a balance that's too large compared to your available credit.   

[SunriseEarth]

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@Anonymous wrote:

And adding to the OP: what kind of websites do you guys use for paying rent, etc with the lowest fees?

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I personally wouldn't recommend the use of a third party service for paying rent with a CC, since the cost typically outweighs most CC rewards programs.   If the landlord/property management accepts CCs for payment for a reasonable fee, then it could be worth it, so long as your rewards earned is greater than the fee assessed.  

[Anonymous]

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@hapagrrl wrote:

Hi - I don't know where I heard it, but I only recently learned that some (or a lot?) of people pay their monthly bills with their credit cards, then simply pay those balances off each month.  Does anyone here do that? Can you explain it to me, including the benefits of doing this? does it help increase credit scores at all?  I'm very curious to know how it all works!

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Not necessarily does it help your score. But it does show history and ability to repay.

Use it like you would cash and don't forget to log in and send that payment when the statement cuts!

[bada_bing]

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@hapagrrl wrote:

Hi - I don't know where I heard it, but I only recently learned that some (or a lot?) of people pay their monthly bills with their credit cards, then simply pay those balances off each month.  Does anyone here do that? Can you explain it to me, including the benefits of doing this? does it help increase credit scores at all?  I'm very curious to know how it all works!

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Most - but not all - utility companies take credit cards and also have an auto-pay option that customers can sign up for. I have my gas, electric, storage rent, phone, internet, cell phone, and satellite dish payments all on auto-pay from credit cards. It is convenient, as the utilities charge their money on their respective due dates to the credit cards I assign to them and then the credit cards get auto-paid in full from my bank account. It literally runs itself and I could disappear for however long the money in my checking account would last (usually 6 months worth in the account) and none of my creditors would ever know or miss a payment. I write almost no checks and I'm never late (or early) with payments. I literally write less than 10 checks a year. I've done my personal finances this way for over 10 years and I much prefer it to writing checks. Another benefit is the record keeping is all available at one place online. I can see (and prove) my payment history from any internet computer by logging onto the credit card accounts.

A side benefit is that I get rewards from the credit cards for the spending. My Ink Cash pays 5% cash back on my phone, cell, and dish. The rest all gets 1 mile per $ on my AlaskaAir cards, My personal value for AlaskaAir miles is $.025. In total I get back about $200-$300 per year in value just for bills I'm obligated to pay anyway.

The only drawback is when a credit card account number or expiration date changes, you need to be pro-active and get the new info to all the accounts.

Paying your utilities doesn't effect your credit score, good or bad, other than if it effects your utilization. 

[longtimelurker]

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@SunriseEarth wrote:

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@Anonymous wrote:

And adding to the OP: what kind of websites do you guys use for paying rent, etc with the lowest fees?

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I personally wouldn't recommend the use of a third party service for paying rent with a CC, since the cost typically outweighs most CC rewards programs.   If the landlord/property management accepts CCs for payment for a reasonable fee, then it could be worth it, so long as your rewards earned is greater than the fee assessed.  

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The exception is if you are trying to meet minimum spend for a bonus quickly (e.g. you need those 40K UR points for a trip ASAP).   Then paying the 2.5% or so for ChargeSmart or similar might be worthwhile.   But certainly not as a regular strategy for the reason SunriseEarth states.

[takeshi74]

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@hapagrrl wrote:

Does anyone here do that? Can you explain it to me, including the benefits of doing this? does it help increase credit scores at all?

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Helps with rewards since they're based on spend.  Doesn't have any impact on scores.  Scores aren't based on usage.  Utilization does impact scoring.  You might want to refer to:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

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@Anonymous wrote:

And adding to the OP: what kind of websites do you guys use for paying rent, etc with the lowest fees?

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I don't.  I only pay bills with credit cards if credit cards are accepted.

[longtimelurker]

This question seems to pop up very often and I am still not sure why!    I guess there are two sorts of bills:

1) Where the merchant takes credit card payments, such as many hone companies, insurance etc.   This seems the most common example, and is NO different from a purchase at a store.   Yes, you are paying a bill, but you are doing the same when you buy apples at the supermarket.     Just watch out for fees from some utilities, which can be enough to negate the rewards

2) Where the merchant doesn't take credit cards.    Here you have to do more work, either paying through a third party for a fee, or loading Serve/BlueBird/Red in various ways that generate rewards, and bill paying through that.