If you love credit card rewards and spend your free time pursuing points and miles, you already know the secret to outsized rewards: The more bills you can charge to your rewards credit card (and pay off right away), the more points and miles you’ll earn over time.
Personally, I pay every possible bill I can with credit – expenses like car insurance, health insurance premiums, groceries, gas, and internet service. Over time, even small purchases can add up to huge rewards that cover some pretty cool travel experiences around the globe.
But, there are certain bills that are tough to pay with a credit card. Your mortgage and rent can be downright impossible, for example. Some companies, like utilities, even charge fees of 3% or more when you swipe – fees that usually cost more than any rewards you’d earn.
So, what do you do when you want to pay with credit and can’t? A fairly new service called Plastiq.com has the answer.
What Is Plastiq?
Plastiq.com is a service that makes it possible to pay bills like rent, tuition, or mortgage payments — and even invoices — by credit card when you ordinarily couldn’t.
Once you open a free account, just add a credit card, enter your mortgage or bill details, schedule a payment, and you’re done. Plastiq will send a check to your mortgage company or bill servicer, and charge the expense to your credit card. And voila, your rewards are on their way. You can set up automatic payments that take place on a certain date every month for a specific amount, or you can make every credit payment manually through the service.
Alas, Plastiq doesn’t offer this service out of the kindness of their hearts. They also charge a fee, typically equal to 2.5% of each bill you pay. So, your $1,000 mortgage payment? You can pay it through Plastiq, and earn credit card rewards for it — but it will set you back $25.
Is that worth it? Not usually- but in some cases, you might decide it is.
When Does It Make Sense to Pay Bills With Plastiq?
Paying a 2.5% surcharge for the privilege of paying certain bills with a credit card is rarely a stellar deal. Yet, there are notable exceptions and times when this strategy can make sense.
In my humble opinion, there are three instances where using Plastiq to pay bills with your credit card can be a boon to any rewards strategy. Those instances are:
#1: When the rewards you earn are more valuable than the fee.
If you’re paying a 2.5% fee to use credit, but earning more than that amount in rewards, then using Plastiq can make sense.
Imagine you have the Discover it® Miles, for example. With this card, you earn a flat 1.5% back on all purchases. However, Discover promises to double your rewards after the first year, bringing your net rewards to 3% for the first 12 months.
If you paid a 2.5% fee to pay a hefty mortgage or other bill, but managed to net 3%, you’d end up ahead — provided you had a good use for those rewards.
#2: When you need to hit a minimum spending requirement to earn a huge signup bonus.
Many of the top travel and rewards credit cards offer huge signup bonuses to those who can meet minimum spending requirements. Take the Chase Sapphire Preferred®, for example. This card doles out 60,000 points worth $750 in travel after you use your card for $4,000 in purchases within the first three months.
While some people can easily spend $4,000 in three months paying regular bills, others with low expenses might struggle to reach that threshold without putting a big expense like rent or mortgage payments on the card. In those cases, it can “pay” to cough up a 2.5% fee if it helps you earn a huge signup bonus.
Even if you paid all $4,000 in bills through Plastiq to earn the signup bonus, you’d fork over $100 in fees to earn $625 in travel. Not bad at all.
#3: When you’re trying to reach a spending limit to earn status (maybe).
Many hotel loyalty programs offer status perks for customers who carry their co-branded hotel cards and meet certain spending requirements. With the Starwood Preferred Guest® Credit Card from American Express (currently unavailable), for example, you can earn Gold status if you use your card for $30,000 in qualified purchases within a calendar year. You can also status match to Marriott and Ritz Carlton to score Gold status with all three chains.
I’m not saying you should pay $30,000 in bills through Plastiq.com to earn Gold status with a hotel chain; that would cost $750 in fees! But it could make sense if you’re getting close to the threshold but need some additional spending to put you over the limit.
The Ritz Carlton card also offers Gold status for free the first year, then each thereafter when you spend $10,000 on the card. If you stay at Marriott or Ritz properties often enough, paying $250 in fees (2.5% of $10,000) to earn Gold status could be worth it. Why? Because Gold status can lead to pricey room upgrades and free breakfast that can be worth significantly more than $250 if you travel often.
The Bottom Line
Outside of these three examples, though, it rarely makes sense to pay bills with Plastiq.
Keep in mind, however, that special promotions can change the numbers quite a bit. Occasionally, Plastiq offers discounts for multiple payments, or a smaller percentage fee for a limited time. You can also sign up for a referral code to earn fee-free payments when you refer your friends.
If your goal is earning more rewards over time, a service like Plastiq.com can help. But, it can also hurt. If you don’t do the math, you could wind up forking over fees that exceed the rewards you earn.
Like all other important financial decisions, you have to take a look at your own situation and run the numbers to see what’s best for you. Paying bills with a credit card can make sense under the right conditions, but it can also cost you more than you’ll get in return.
Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.
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Have you ever heard of Plastiq.com? Would you pay bills this way or not?
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