How to earn rewards when paying monthly bills

Cashing In columnist Tony Mecia
Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. He writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com

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Question Dear Cashing In,
What would be the best credit card choices to pay your monthly bills to gain rewards? Which ones would you benefit the most? – Dawayne

Answer Dear Dawayne,
For people who grew up accustomed to writing checks for many purchases, it can be tough to adopt a strategy of making as many purchases through credit cards as possible. But it is a sensible strategy, assuming you pay off your credit card bills on time and in full every month. 

If you write a check, use online banking from a checking account or pay cash for something, you’re missing out on rewards that you could be earning by using a credit card. 

So, the logical move is to charge everything you can. Surveys show that about three-quarters of people prefer paying with a credit or debit card, with about 1 in 10 preferring cash. Of course, you’ll want to be careful you aren’t charging more than you need, or than you would have if you were paying cash.

Options for paying your monthly bills

It makes sense to extend this principle to your monthly bills. And if you can find credit cards that award bonus points for your monthly bills, all the better. 

Unfortunately, your options on credit cards with category bonuses on monthly bills are severely limited. The most common category bonuses on credit cards are for travel, restaurants, gas stations and grocery stores. Extra points on your municipal water bill? I don’t know of a card that has that. 

Generally, your monthly bills fall into one of these three categories:

  • Can’t pay with credit card. Most loans cannot be paid with credit cards, including mortgages, auto loans and student loans. And you can’t pay a credit card bill with another credit card. If you rent, most landlords won’t let you charge your rent. There are some bill-pay services that allow you to use credit cards, but they usually charge a fee that makes charging them unwise for rewards purposes.

  • Can pay with credit card, but no rewards bonus. A lot of your utility bills and other monthly bills fall into this category, such as water, gas and electricity. When you pay those bills with a credit card, you might be assessed a convenience fee of a few dollars for the privilege of using card, so decide if that is still worth it for you. (I usually agree to it.) 

  • Can pay with credit card and have category bonus. There is only one card bonus category I know of that comes in the form of a monthly bill, and that’s your cable, phone or internet bill. For the first quarter of 2018, Chase Freedom cardholders can get 5 percent back when paying their cable, phone and internet bill with their card. Also, several business credit cards offer those bills as a bonus category, including Chase Business Ink Cash (no annual fee, 5 percent back on cable/phone/internet), Chase Ink Business Preferred (annual fee: $95, 3 percent back on cable/phone/internet) and American Express SimplyCash Plus (no annual fee, 5 percent back on wireless services). 

If you use AT&T for cable, internet or phone, you might look at the AT&T Universal Savings and Rewards Mastercard (no annual fee), which saves you 10 percent on your AT&T bill in the first year and 5 percent after that, up to $350 a year.

In addition, you might occasionally find a monthly bill that earns extra rewards on credit cards that rotate their bonus categories or allow you to choose bonus categories. For instance, the U.S. Bank Cash+ Visa (no annual fee) lets you choose two categories in which to earn 5 percent back, including “gyms/fitness centers.”

Best card strategy 

It probably doesn’t make sense to get a reward card just for the purpose of earning extra points on your phone bill or gym membership, because the amount you spend on those are probably meager compared with other categories. Some of those business cards, however, do offer cash back in other categories besides cable and phone.

It's a good idea to keep a lookout for category bonuses on all of your cards, so you don't miss out on a great rewards bump. In the last half of 2017, American Express cardholders who switched their cable, internet and phone bill to their AmEx card got 10 percent cash back. 

When it comes to utilities and other bills you pay monthly, usually you can’t score you extra points. A more sensible strategy might be to find a reliable card that gives you a healthy reward rate on everything you buy. Most cards will offer 1 point or 1 percent back on spending in these “everything else” categories, but you can do better.

You might look at my column on the best flat-rate cash-back cards, which could come in handy on some of these routine monthly bills.

See related: How to avoid paying convenience fees on utility bills

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Updated: 02-24-2018