Do you pay bills with a credit card and pay it off each month?

Question

I thought I was making such a brilliant decision by signing up for a cash back credit card and paying my monthly bills with it and then pay it off every month. It hasn't worked out, but I know a lot of people have luck with this system. Any tips on how to make it work?

Caitlin Martin · Answer

This method really only works if you use your credit card like a debit card and pay EVERY SINGLE THING to zero out the balance every month.  My husband does this with some of our bills (because of those oh so shiny rewards), but we really have to be diligent about tracking, and often make multiple payments to the credit card every month to accommodate purchases that hadn't been planned on.

I don't recommend this method unless 1) you have enough income to cover some fluctuation in your bills or 2) you're super, duper, extra diligent in tracking your expenses.  I would say most people are not as diligent as they think they're going to be... tracking expenses that closely is time consuming and is one of the first things dropped when you get busy... it's also much harder to be spontaneous.  If you can't pay it off every month, you'll quickly accrue interest, in which case the rewards points are just trinkets and coupons in comparison to what you're spending on interest.

Tatiana · Answer

I tried to do the same, but found that I'm better off with a card that gives double/triple points for travel/dining because those are my most consistent expenses and then the points count more toward travel (Chase Reserve customer here). Matching your card rewards with your spending style is how you'll get the best deal.

Francesca Vanderwall · Answer

This is where multiple credit cards come in handy. Personally, I have all my recurring bills on Chase Freedom for a few reasons. One, they had a quarter where they were giving 5% on utilities (I can't remember which ones.) Two, it's not my primary card. Three, I have enough discipline to only put 5% charges on that card (this quarter it's gas and something else.) My other spending goes on my other cards.

Granted, I'm a credit card rewards junkie. I spent over a decade working in credit card marketing and I want to maximize every penny I can. (My husband and I haven't paid out of pocket for a cell phone in at least five years.)

Tami Wolf · Answer

I put almost everything on my Capital One Venture card so I can get the travel miles (I pay $99/year for double miles on every purchase).

I created a budget of recurring monthly expenses and subtracted that from my paycheck to figure out how much discretionary income I have every month. Then I calculated which recurring monthly expenses came out of my bank account (mortgage, HOA, electric bill) and which go on my card.

This way, I know that X dollars are going to go on my card no matter what, and I know that I have an additional Y amount I can spend. Like Sara said above, this means watching the bill go up. It's a bit painful, but paying for plane tickets with points instead of dollars makes it worth it!

Maggie B · Answer

My partner and I are buying a house together, and will be putting all of our bills against a shared checking account that we both direct deposit to.  We've agreed that that account will be used for house costs only, and if need be, we can move money there to cover things like a chest freezer or a new electrical panel.
I use my credit card for larger expenses and Amazon purchases, and pay over double the minimum every month at a fixed rate.  I occasionally pay over that, but setting and forgetting a monthly payment on things like my CC and student loans has really helped to establish my credit.

Jessica K. · Answer

Yes, I absolutely pay off my credit card in full each month.  Interest is no joke and can start to add up.  Similar to others, I put everything on my card to gain points (I have the Chase Sapphire Reserve card--SO good if you like to travel!).  There have been times when some months have been higher than others and will take from savings to pay off.  I just try and keep track of what I'm spending and not spend beyond my means.

Erica Chai · Answer

I use my credit card for all expenses so I also build up my points and cash rewards. When I pay, I pay with my checking account and try my best to pay off everything each month.

Anonymous · Answer

Just wanted to say thank you for this post! It's got me thinking of reconfiguring how I pay my monthly bills, and I appreciate the warnings in some of these posts as well. So glad I found this!

Anonymous · Answer

Yep! My partner and I have two credit cards that we put almost all of our expenses on and pay off every month. It's helped us manage our cash flow and save more.

Jess Stetson · Answer

We use YNAB, and it's helped big time. I recommend it to pretty much everyone.

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