Credit cards can be a tricky enterprise. On the one hand, you don’t want to overuse them or rack up debt, which ends up costing you in the form of high interest and negatively impacts your credit score.
On the other hand, many credit cards offer rewards and points for use, and they can be a great, easy way to automate payments so you don’t have to worry about immediate cash flow or bank balances. Experts recommend which kinds of monthly bills you should pay by credit card.
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Monthly Necessities
Though credit cards may seem to exist for big, unexpected or emergency purchases, Ryan Ortega, a financial advisor at Third Line Financial Planning, says it’s best to pay monthly necessities on your credit card.
This includes expenses like your cell phone and internet bill. It also can be things like ongoing subscriptions from Netflix, Spotify, Disney Plus or other similar services.
“The reason for putting these expenses on your credit card is they are mandatory — you have to pay them — so you might as well get rewarded with cash back or airline miles,” he said. “Doing this also helps you not go into debt, since these aren’t discretionary purchases where you can spend above and beyond what you were planning on spending.”
Small Monthly Subscriptions
The conundrum of credit cards: If you have open accounts, you need to use them in order to keep your credit score up. Therefore, it’s best to go for small, recurring items such as your Netflix subscription or similar, and set it up for automatic payments, according to Jay Zigmont, founder of financial planning firm Live, Learn, Plan.
“The result is the card will stay active and reporting and effectively will always have a zero balance,” he said.
Of course, you want to be sure to pay it off each month, or those small expenses will incur interest.
Recurring Expenses and Bills
Using a credit card for recurring expenses on one credit card is helpful for both automating your bill paying and showing you where your money goes,” said Greg Wilson, a chartered financial analyst and co-founder of ChaChingQueen.com, a lifestyle blog about living happily on a budget.
“That card is just for utilities, phone bills and subscriptions,” Wilson said. “We’ve made decisions like cancelling redundant gym memberships because of it.”
Utilities, Internet, Cell Phone and Auto Insurance
Lots of credit cards offer rewards for spending, so putting your utilities, internet service, cell phone bill and auto insurance on a credit card has a lot of benefits, according to Adam Wood, co-founder of RevenueGeeks.
