Here’s an interesting money question from AskMetafilter:
What are the potential downsides to using a credit card to pay my monthly bills, assuming I pay off the balance every month? I currently pay all my bills from my checking account and have recently thought about getting a credit card with some kind of rewards for this purpose instead. I won’t be carrying a balance on the card; I just want to try and get something back from all my bills. What are some things to be careful for if I decide to go this route? Are there hidden dangers to doing this that I’m not seeing?
Among the more helpful responses:
- Airmiles are becoming less valuable and more difficult to use — shop around for a good rewards program.
- Some creditors, especially utilities, may charge a fee for processing a credit card payment.
- “If you have a dispute about a bill, it’s much harder to get it rectified, because you have already paid the bill before you ever saw it.” Also, you’re less likely to notice suspicious billing anomalies if you never actually look at the bill.
- If you only have one credit card, and you’re using it to pay monthly bills, it may have a small negative effect on your credit score as your balance bounces up-and-down, especially if you commonly charge a significant portion of your credit limit. (More info.)
- It can be difficult to stop credit card payments, especially to big companies with entrenched bureaucracies.
- “I set my health insurance up for credit card billing, then my card number got fraudulated. Naturally, I got a new card, and when they billed the old card, it was declined. The catch is that the fine print was that they could charge me a $25 or something fee if the card was declined. Oops.”
- Correcting even a small mistake can make a huge difference to your score just by checking your free credit report
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Despite these cautions, people generally agreed that the advantages outweigh the disadvantages if a person is responsible and pays the credit card balance every month. The thread offers some suggestions for selecting an appropriate card; most people seem to prefer cash-back bonuses to reward points or airmiles.
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