Using Credit Cards to Pay Monthly Bills
Friday, December 21st, 2007Gather a bunch of people over dinner and ask the question, “Do you use your credit cards to pay your monthly bills?” and you might be surprised to find that the question generates a great amount of conversation around the table. In fact, it might cause tempers to flare as the debate moves back and forth between those people who do use credit cards to pay monthly bills and those people who don’t. That’s because there are pros and cons to this practice and there are people with strong reasons for standing on either side of the issue.
Those people who are for using credit cards to pay their monthly bills are generally people who make their monthly payments on time. Their biggest reason for engaging in the practice is that they benefit from using their credit cards. Making purchases (including monthly bill payments) on your credit cards can improve your credit score, assuming that you pay the bill off in full each month. Additionally, if you use rewards cards, these purchases translate to points that will give you something in return for using the card.
In contrast, people who don’t pay their monthly balance off in full will find that there are more disadvantages than advantages to using their credit cards to pay off monthly bills. The biggest con for these people is that the monthly balance is relatively high. An inability to properly budget can make this amount unmanageable, leading to financial stress. These people may find that they can manage their bills just fine when the money comes straight out of a debit account but that they’ll spend the money on luxuries instead of bills if they wait until a credit card payment is due each month.
There are two other considerations that can sway people to either the “pro” or “con” side of this camp. One is how often they receive an income check. People who get their checks monthly may find that using a credit card can keep their bill payments on time even though their check is a week away. People with weekly or bi-weekly checks won’t have this problem. Secondly, a person’s opinion on automatic payments will have an impact on the issue. Those people who prefer to write out checks may not like the idea of having a credit card automatically pay their bills while a person who loves the convenience of automatic payments might prefer this method.
Ultimately, it ends up being a personal preference. Some people will love using credit cards to pay their monthly bills. Others will hate it. And the debate will rage on in dining rooms across the nation because neither way is inherently better than the other.
