When managed sensibly, credit cards can be used as an option for routine bills. Whether you currently use Direct Debits or bank transfers to cover the cost of your bills, read on to find out if swapping these methods for a credit card fits with both everyday budgeting and your wider financial goals.

Paying bills with a credit card: can it be done?

Yes, it's possible to pay some bills with a credit card. Some companies accept credit card payments as standard, others limit them to certain account types or one-off payments, and some – like UK landlords and local councils – don't accept credit cards at all.

What does paying bills with a credit card involve?

If you can pay the company with a credit card, the payment is taken from your credit card instead of paying a bill directly from your current account. This means that, as with other credit card payments, the credit card provider pays the bill upfront and you repay it when your statement arrives.

But it's not always the best option. Fees, higher interest rates and the risk of overspending or not being able to afford other essential bills should all factor into your decision.

Which bills can you pay with a credit card?

There are several types of bills that accept credit card payments. It'll vary by provider, but here are a few examples:

1. Household and utility bills

Some utility companies accept credit cards for one-off payments or account top-ups, including:

• Gas and electricity: Generally, providers prefer Direct Debit payments but will accept card payments through their online portals.

• Water and sewage: Acceptance varies by region and provider.

• Council Tax: This depends on where in the UK you're based, and paying on card may come with a processing fee.

• Broadband and mobile contracts: Generally reliable for both one-off and recurring payments.

• TV packages and streaming services: These will usually accept recurring credit card payments (also known as a continuous payment authority).

2. Insurance

Some insurance providers allow customers to pay by credit card for annual premiums or for one-off payments rather than monthly payments. Monthly instalments tend to be treated as a separate credit agreement, so you would need to be sure this isn't the case before you try paying monthly on a credit card.

3. Subscriptions and digital services

You can typically use a credit card to pay for:

• Cloud storage

• Apps and app store purchases

• Music, film and gaming subscriptions

• Software licences

4. Retail and membership fees

Some gyms, clubs and retailers accept recurring credit card payments instead of Direct Debits. Charities and fundraising platforms may also accept credit card donations.

5. Public services

You can use your card to make one-off payments to the DVLA for vehicle tax and for services like passport renewals and certain licensing fees.

6. Rent

Most private landlords don't accept credit cards directly. However, some letting agents do, and third-party payment platforms may allow you to pay rent by card, although this usually comes with a fee.

If you're ever in doubt, always check the service provider's accepted payment methods, as rules can change. Make sure you confirm whether the company you are buying the service from will apply processing charges because these can quickly outweigh any potential benefit like cashback.

Ways to pay: methods for paying your bills on a credit card

This can depend on how each service provider structures payments and how automatically you want the payment to be taken.

Direct recurring card payments

Some companies allow you to set up a recurring credit card payment, often called a continuous payment authority or CPA. Unlike a Direct Debit (which means you authorise your bank account to make the payment), you give permission to your card issuer.

With a CPA, you give your card number, expiry date and security code. The provider then charges your card on the agreed date every month.

It's useful for subscription-style payments like streaming or gym memberships. However, CPAs don't come with the same protections as Direct Debits, which are covered by the Direct Debit Guaranteeopens in a new tab. Also, replacement credit card details can affect the payment and interrupt the service being provided unless you update them promptly.

One-off online or phone payments

This is a flexible method which works well with companies that don't support recurring card payments. To make a one-off payment when your bill arrives, you go online or call the provider and manually enter your credit card details for each payment.

You might find this is suitable if you're using your credit card to pay irregular bills – like quarterly water bills. It might also be worth considering for times when you want maximum control over the payment date.

Paying via third-party platforms

Some services let you pay bills using your credit card through a third party. Examples include rent payment platforms and some digital wallets.

With these third-party payment options, you pay the platform using your credit card. The platform then pays the company or organisation via bank transfer.

While this can be helpful for paying large amounts, like your monthly rent, the fees associated with it can be high.

Using money transfer credit cards

While it's not something we offer right now, money transfer cards are available on the market. This is an indirect payment method used when a business or organisation only accepts bank transfers, rather than card payments. With this option, a specialised money transfer credit card sends a cash amount directly to your current account. You then use that cash to pay the bill via a standard bank transfer or Direct Debit. You repay the credit card balance later.

A transfer fee is often involved, and this is usually 3-5%.

It's important to note that a money transfer card isn't the same as a balance transfer card. A balance transfer cardopens in a new tab is designed to let you move a balance from one credit card to another.

Why 'cash advances' matter when paying bills with a credit card

A cash advance is a transaction where you access cash or a cash-equivalent service using your credit card. This is fundamentally different from making a standard card purchase. Although it's a service many credit cards provide (at a cash machine or a bank, or sometimes online), it can be an expensive way to borrow money.

Understanding this difference is crucial because if a bill payment is incorrectly or unexpectedly classified as a cash advance, it becomes more expensive and can be a setback for your finances.

What is a cash advance in the context of bill payments?

Your credit card provider may treat certain bill payments – particularly those made through third-party services or by money transfers – as cash advances. This happens because these transactions resemble cash withdrawal or transfer rather than a direct purchase of goods or services.

If you're considering paying for a bill with a cash advance, it's important to bear in mind:

Immediate and expensive interest

Interest on a cash advance starts accruing immediately from the date the transaction is processed. Unlike standard purchases, there's no interest-free grace period, even if you pay your statement balance in full every month.

Higher fees

A dedicated cash advance transaction fee is applied instantly. This is typically a percentage of the amount (for example, 3 to 5%), often with a minimum fixed charge – although you might be charged whichever amount is greater.

Higher Annual Percentage Rate (APR)

The APR applied to cash advances is often significantly higher than the standard purchase APR on the same card.

Always check your card's terms and conditions. If you're unsure, contact your provider to confirm whether a specific bill payment will be classed as a cash advance or not.

Advantages of paying bills with a credit card

Using a credit card to pay bills can be helpful, depending on your goals and spending habits.

Smoother cash flow

If you need to cover a bill payment before your paycheque, a credit card can help because it gives you extra time. Depending on your billing cycle, it might be up to a month before you need to start paying it back.

Earn rewards, cashback or points

Some credit cards on the market offer cashback, loyalty points or air miles (be sure to check if yours has these features). Paying your bills by card could help to contribute to these perks. And if you can afford to pay off your balance in full every month, these rewards can offset everyday costs.

Extra protection through Section 75

Under Section 75 of the Consumer Credit Actopens in a new tab, credit card purchases between £100 and £30,000 may be protected if something goes wrong with the goods or service.

This makes the card issuer jointly liable with the retailer. If the retailer goes bust or the service is not delivered, you could claim from your credit card provider.

Section 75 is useful if you're buying annual insurance policies, making travel bookings or paying for expensive repairs or goods on your credit card. But it doesn't apply to most utility bills, taxes or payments made via third-party agents, as the legal relationship for goods and services is broken.

Flexibility during emergencies

If a large, unexpected bill arrives, using a credit card can give you breathing room while you adjust your budget. This isn't a long-term solution, but it can carry you through temporary cash-flow gaps, if you can afford to repay in a way that's affordable to you.

Credit building success

Using a credit card for manageable bills and repaying them on time every month demonstrates responsible credit use, which is an effective way to build a solid credit history. The Capital One Classic Cardopens in a new tab is designed to support credit building, with a manageable credit limit that can help you show that you can manage credit successfully. Not using your card responsibly could harm your credit score, and might make it harder for you to get credit in future.

Disadvantages of paying bills with a credit card

While you can pay a bill with a credit card, there are some drawbacks that might make this unsuitable for some people.

Fees from companies and third-party platforms

Some companies – particularly when payments are made through third-party platforms – charge processing fees or surcharges for card payments. Even small amounts can add up over time, especially on regular payments.

Higher interest if you don't repay in full

Credit card interest rates are often higher than personal loans and can be expensive compared with other forms of borrowing. If you don't pay off your balance in full each month, you'll start to be charged interest on your remaining balance. These charges can rise quickly and keep you in debt for longer.

Risk of building up debt

It can be easy to fall behind and start rolling balances over from month to month. Bills can feel less immediate, which might make them easier to ignore.

The impact of high credit utilisation

This is a key metric for building your credit score. High utilisation (using a large percentage of your credit limit) can negatively impact your credit score.

The credit utilisation ratio is calculated as your current balance divided by your total credit limit, times 100. So if, for example, your limit is £1,000 and you spend £500, your utilisation is 50%.

A high utilisation could have a negative impact on your credit score, so many providers suggest keeping your utilisation low to help support a healthy credit profile.

Less consumer protection on recurring payments

Recurring card payments (or CPAs) don't come with the same guarantees as Direct Debits, meaning you don't benefit from the Direct Debit Guarantee.

Tips for safe bill payments

If you're considering using your credit card to pay for bills, make sure you've thought about everything on this checklist before you go ahead:

1. Check for fees: Confirm whether the service provider (whether that's the water company or energy provider) or third-party platform applies processing fees. If the fee is higher than any rewards you might earn, consider paying via Direct Debit instead.

2. Check it's not a cash advance: Contact your card issuer or review your terms and conditions to ensure the payment type (especially utility, tax or third-party payments) won't be seen as a cash advance.

3. Monitor how much you use: Calculate your credit utilisation ratio. If you think adding the bill will push you too close to your limit, consider paying it with your debit card instead. Or pay a large portion of your credit card balance before the statement closing date (if these are affordable).

4. Set up full repayment: If you can afford it, consider setting up a Direct Debit to pay the full credit card balance every month, which could help you avoid building interest.

5. Review quarterly: Check your credit card statement and your credit report regularly (for example every three months) to stay on top of things. You can get all the information you need through a free service like CreditWiseopens in a new tab or access your report through the main credit referencing agencies – Experianopens in a new tab, Equifaxopens in a new tab and TransUnionopens in a new tab.

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