Pay Electric Bill With Credit Card: A Detailed Guide

Paying your electric bill with a credit card can be a smart financial move if done right With the right credit card, you can earn rewards on your electric payments and potentially come out ahead However, if not used responsibly, paying electric bills with credit cards can lead to debt and extra fees. This comprehensive guide will walk you through everything you need to know about using credit cards for electric bill payments.

Overview of Paying Electric Bills With a Credit Card

• Paying electric bills with a credit card allows you to earn rewards like cashback or points on your payments. This can offset some of the cost of the bill

• However, most utility providers charge a convenience fee for credit card payments, usually 1-3% of the bill amount. This eats into any rewards you earn.

• To come out ahead, you need to use a credit card that earns a high rewards rate and keep the bill payment within your budget.

• Interest charges can accrue if you carry a balance, so you need to pay off the bill in full each month.

• Introductory 0% APR offers can provide short-term financing but make sure you pay off the balance before the promo period ends.

How Credit Card Rewards Can Offset Electric Bill Fees

Credit cards that offer high rewards rates on utility bill payments can help offset those pesky convenience fees charged by electric companies. Here’s a quick example:

• Your electric bill is $100
• The electric company charges a 3% credit card convenience fee ($3 on a $100 bill)
• You pay with a credit card that earns 5% cashback on utility payments
• You would earn $5 in rewards on the $100 electric bill
• That $5 in rewards offsets the $3 convenience fee, putting you $2 ahead

The key is finding a credit card with an above-average rewards rate on utility payments and keeping your bill within your budget. We’ll highlight the best options later in this guide.

Know the Typical Electric Company Convenience Fees

Most electric providers charge a fee for the convenience of paying your bill with a credit or debit card. Here are some typical convenience fees:

• Flat fee (usually $2 – $5 per transaction)
• Percentage of the bill (1% – 3% of the total bill amount)
• Monthly cap on fees (e.g. $5 max fee per month)

So for a $100 electric bill, you may pay an extra $3 if there is a 3% credit card fee. Look up the specific convenience fees charged by your electric company to determine if rewards can offset the extra cost.

Best Credit Cards for Paying Electric Bills

Now let’s look at some of the top credit cards for electric bill payments and utility payments in general:

Citi Custom Cash Card – 5% Cashback

• Earn 5% cashback on up to $500 spent each billing cycle in your top eligible spending category, which includes utilities.

• Has no annual fee. New cardmembers can also earn $200 cashback after $750 in purchases in the first 6 months.

• With the high 5% rate, rewards can offset fees on larger electric bills.

Chase Freedom Flex – 5% Rotating Categories

• Earn 5% cashback on up to $1,500 in combined quarterly rotating categories each quarter.

• Utilities are occasionally included as one of the 5% categories.

• No annual fee. Has a $200 signup bonus after $500 spend in the first 3 months.

Citi Double Cash – 2% Flat Rate

• Earns 2% cashback on all purchases with no category restrictions. A simpler option.

• Useful for smaller electric bills where convenience fees eat into the rewards earned from higher-rate cards.

• Has no annual fee. Includes an intro 0% APR offer on balance transfers.

Be Wary of Interest Charges

If you routinely carry a balance on your credit card, interest charges can quickly cancel out any rewards earned on electric bill payments. Average credit card interest rates are between 16% and 25% APR.

To avoid interest, always pay your bill in full each month. If that’s not possible, look for an introductory 0% APR offer when getting a new credit card. You can pay down a balance over many months without accruing interest.

Use Autopay for Utility Bills

Setting up autopay through your credit card is an easy way to ensure electric bills get paid on time each month. Just be sure you have the funds available in your bank account to pay the statement balance in full when due.

The key benefit of autopay is avoiding late fees from the electric company, which are typically around $10-25. It also helps maintain an on-time payment history which is good for your credit scores.

Take Advantage of 0% Intro APR Offers

As mentioned earlier, some credit cards offer a 0% introductory APR on purchases and/or balance transfers for 12-18 months. If cash flow is tight, this can give you time to pay off larger electric bills without incurring interest.

A few examples of credit cards with 0% intro APR offers:

• Citi Simplicity® Card – 0% for 21 months on balance transfers
• Wells Fargo ReflectSM Card – 0% for 18 months on purchases
• Chase Freedom Unlimited® – 0% for 15 months on purchases

Just be sure to pay off the full balance before the intro period ends to avoid deferred interest. Make payments on time to avoid late fees.

Track Rewards Earnings and Fees

To determine if a credit card is worthwhile for electric bills, track both your rewards earnings and convenience fees over several months. Document each electric payment, including:

• Bill amount
• Convenience fee charged
• Rewards earned
• Net cost after rewards

Tally up the numbers after 3-6 months. If rewards consistently outweigh fees, the card is worth using. If fees are higher, try a different card.

Apps like Mint, YNAB, and Personal Capital can automatically track this for you and save a lot of manual work.

Alternatives to Credit Cards for Electric Bills

Credit cards with rewards aren’t the only way to pay electric bills. Consider these alternatives:

• Enroll in budget billing – Pay a fixed amount each month to avoid seasonal spikes.

• Use a debit card instead – May have lower or no fees but no rewards.

• Pay by checking account – Link your checking account to pay direct with no fees.

• Pay cash via retail locations – Take the bill to grocery/convenience stores to pay in cash.

• Prepaid power company credit card – Some utilities offer their own rewards card for bill pay.

Evaluate your options to find the most cost effective payment method that fits your financial situation.

How to Apply for a Credit Card for Electric Bills

If you’ve decided a rewards credit card makes sense for paying your electric bill, here are some tips for getting approved for one:

• Check your credit reports and scores so you know where you stand. Sites like AnnualCreditReport.com and Credit Karma provide free access.

• Reduce credit utilization below 30% if possible by paying down balances.

• Avoid applying for multiple cards in a short timeframe as too many “hard” inquiries can ding your score.

• Consider starting with your existing bank first where you have a relationship.

• Fill out applications completely and accurately to boost approval odds.

• Be ready to provide income, employment, and contact information.

• Accept low credit limits to start and request increases over time with on-time payments.

Final Thoughts on Credit Cards for Electric Bills

Paying your power company with a credit card can be rewarding with the right strategy. Find a card with an above-average rewards rate, watch out for interest charges, take advantage of 0% intro APR offers when available, and track your net costs closely. Done responsibly, credit cards can offset at least part of the fees charged by electric companies today.