Attention millennials, it's time to take advantage of a little hack that can help you earn rewards and save money while managing your expenses! Have you ever considered paying your bills with your credit card to accumulate rewards points? Today, we dive deep into the world of credit card rewards and explore the dos and don'ts of using them to pay your monthly bills, as well as the potential risks and benefits involved. Let's get started!
Paying Bills With Credit Cards For Rewards Table of Contents
Why Pay Bills with Credit Cards?
Paying bills with a credit card can bring about several benefits, including:
- Earning rewards points, miles, or cashback
- Building a credit score
- Managing cash flow (if done responsibly)
- Enjoying more convenience
- Adding security and protection on payments
Earning Rewards Points, Miles, or Cashback
One of the main reasons for paying bills with a credit card is the ability to earn rewards on your monthly expenses. By choosing a rewards credit card that suits your lifestyle and spending habits, you can accumulate points, miles, or cashback each time you pay a bill.
Building a Credit Score
Using your credit card to pay bills consistently and responsibly may help to improve your credit score. A good credit score opens the door to better financial opportunities, like lower interest rates on loans, higher credit limits, and better terms on mortgages.
Managing Cash Flow
Credit cards can be a useful cash flow management tool when used correctly. By utilizing the interest-free grace period (usually between 21-25 days) offered on credit cards, you can pay your bills on your credit card and gain extra time to settle the balance without incurring interest.
Convenience
By setting up automatic payments on your credit card, you can avoid dealing with multiple due dates or worrying about missed payments. Consolidating all your bill payments on a single card can make it easier to manage your finances.
Security and Protection
Credit cards offer robust fraud protection. If you ever become a victim of fraud or if there’s a dispute over a bill, credit card companies can often help resolve the issue by temporarily crediting back the disputed amount until the matter is resolved.
Drawbacks and Risks
However, paying your bills with a credit card can also come with risks and drawbacks, such as:
- Interest charges if not paid in full
- Transaction fees
- Impact on your credit utilization
Paying Bills With Credit Cards For Rewards Example:
Let's say you have a credit card that offers 2% cashback on every dollar spent. Your monthly bills include:
- Rent: $1,000
- Utilities: $200
- Phone and internet: $100
- Streaming services: $50
- Gym membership: $50
Total monthly expenses: $1,400
By paying these bills through your credit card, you would earn 2% cashback, which translates to $28 in rewards each month ($336 annually). However, always be mindful of transaction fees and interest charges that may apply.
Paying bills with a credit card can be a smart way to accrue rewards and manage your finances, as long as you do it responsibly. Be wary of transaction fees and interest charges, and always pay off your credit card balance in full each month. Now that you've learned the ins and outs of paying bills with credit cards for rewards, why not share this article with your friends? We're sure they'd appreciate the heads-up on this handy financial trick. And remember to check out more informative guides on personal finance from Flik Eco, where we break down complex topics into simple and tangible concepts. Happy saving!
