Can You Pay Your Electric Bill With a Credit Card?

Paying your monthly bills can feel like a burden, especially when it comes to costly utilities like electricity. But did you know you may be able to earn rewards, build your credit, and ensure on-time payments just by charging your electric bill to a credit card?

There are some benefits to paying your electric bill with a credit card, though the rules vary by provider. However, there are also potential drawbacks to keep in mind. This complete guide will teach you everything you need to know about using a credit card to pay your electric bill.

The Good: Potential Benefits of Paying Electric Bills With a Credit Card

Here are some of the key benefits that make credit cards a viable option for electric bill payments

Earn Rewards and Cash Back

One of the biggest perks of paying bills with a credit card is the opportunity to earn rewards If you have a cash back credit card, you can earn a percentage of money back on every dollar you spend Some cards offer category bonuses on utility payments, meaning you’ll earn even more cash back.

Over time, the rewards you earn from electric bill payments can add up. You can turn those points into statement credits that you can use to pay for other things, gift cards, merchandise, travel, and more.

Convenience of Autopay

By setting up autopay for your electric bill on a credit card, the payment will always process on time each billing cycle This avoids potential late fees from missed payments

With autopay from a bank account, you have to monitor your balance to ensure sufficient funds. But with a credit card, you don’t have to worry about that. The payment will go through when due as long as you have available credit.

Added Purchase Protection

When you pay for something with a credit card, some of them offer extra warranty, return, and purchase protection. This means that you might be able to get your money back if an electronic or appliance that is covered by your electric bill gets broken or stolen.

However, coverage varies widely, so read the fine print on any card protections before relying on them.

Credit Building for New Users

If you’re new to credit, paying bills on time with a credit card demonstrates responsible usage. That can help build your credit history and improve your scores over time.

Just be sure to avoid maxing out cards and maintain a low credit utilization rate. Using more than 30% of your available limits can negatively impact your credit.

Easier Disputes on Erroneous Charges

Billing errors or fraudulent charges sometimes occur on utility accounts. With credit cards, you have powerful protections if you ever need to dispute a charge.

Under the Fair Credit Billing Act, you can withhold payment on disputed credit card charges without penalty or damage to your credit. Disputes generally resolve much faster than if the error were on a bank account payment.

The Bad: Potential Drawbacks of Paying With a Credit Card

While the benefits can be enticing, there are also some potential downsides to weigh:

Credit Card Processing Fees

One of the biggest detractors is that utility companies often charge processing fees for credit card payments. These “convenience fees” or “service fees” range from 1.5% to 5% of the payment amount.

Over the course of a year, those fees can greatly diminish—or even outweigh—any rewards you earn from the card.

Risk of Credit Card Interest

Paying bills with a credit card only makes financial sense if you pay off the balance in full each month. If you carry a balance, credit card interest rates of 15% or higher quickly add up.

Before charging any bills, make sure you have a plan in place to pay off the statement balance each billing cycle. Otherwise interest costs will eat up any rewards earned.

Potential Damage to Credit Scores

Adding large recurring bills to your credit cards can increase your credit utilization ratio—the percentage of your total credit limit that you’re using.

Experts recommend keeping credit utilization below 30%. Using over that threshold may lower your credit scores.

To avoid this, only charge bills that won’t push your balances over 30% of your available credit limits. Or consider spreading electric bills across multiple cards.

Lost Rewards on Checking Accounts

Some checking accounts offer rewards on monthly bill payments, including utilities. You would miss out on those perks if you pay bills with credit cards instead.

Limits on Rewards Earnings

While many credit card rewards structures are very generous, some do impose capped rewards on certain spending categories. Make sure your card doesn’t limit how much you can earn back on utility payments and other bills.

How to Pay an Electric Bill With a Credit Card

Ready to start reaping the rewards of charging your power bill? Here are some tips for doing it right:

• Contact your provider. The first step is to check with your electric company to see if they accept credit cards. Payment policies vary, so don’t assume. Ask about any processing fees as well.

• Pick the right card. Opt for a card that offers strong rewards earning on utilities and bills to maximize your benefits. Cards with no foreign transaction fees are ideal since utility processors often code as foreign transactions.

• Set up autopay. Log into your electric company’s website and set up automatic monthly payments from your credit card so you never miss a payment.

• Watch your balances. Be vigilant about your credit utilization. Keep balances low and spread electric payments across multiple cards if needed.

• Pay in full. Never carry a balance or you’ll wipe out rewards with interest charges. Set payment reminders and pay on time.

Boost Your Credit With Experian Boost®

Even if you don’t pay electric bills with a credit card, you can still leverage your timely payments to improve your credit. With Experian Boost®, you can quickly boost your credit scores by reporting positive payment histories on utility and telecom accounts directly to Experian.

To get started, just sign up for a free Experian account and link your electric bill. Experian will add your positive payment history to your credit file, which could improve your credit scores right away.

The whole process takes just a few minutes and doesn’t impact your credit score unless it helps. So you have nothing to lose and valuable credit score points to gain.

The Bottom Line on Paying Electric Bills With Credit Cards

While paying your power bill with credit cards has its merits, it’s not ideal for everyone. Make sure to thoroughly understand the risks before signing up for autopay on your electric account. But used strategically, paying with plastic can earn you rewards and strengthen your credit profile.

Hopefully this guide gave you the full details on the pros, cons, and logistics of charging your electric bill to a credit card. Just stay focused on paying balances off in full each month, and any rewards you earn are like free money on top of simply paying your essential utilities.

Frequency of Entities:
Can You Pay Electric Bill With Credit Card: 6
credit card: 24
electric bill: 14
rewards: 10
credit: 16
payment: 13
balance: 7
autopay: 5
utility: 5
interest: 4
fees: 4
credit score: 4