Paying your bills with a credit card
Want to use BPAY with a credit card? Or earn points for your bills? Here's what you need to know.
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Your options for paying a bill with your credit card depend on the type of bill, the payment choices you're given and even your credit card provider. In most cases, there will be a way to pay by credit card but there could be restrictions around earning points or using BPAY. You might also pay extra for using your card thanks to fees and interest. So, here's what you need to know before deciding whether to pay your bills on plastic.
How to pay your bills with a credit card
There are two main ways you can use your credit card to pay bills: direct debits and one-off payments (which includes BPAY).
1. Direct debits
Bills that are charged regularly can usually be set up as direct debits from your credit card account. This could include your mortgage repayments, insurance premiums, home utility services, gym membership, Internet and other subscriptions for entertainment services like Netflix or Foxtel. Very often, all you need to do is call your service provider.
How do you set up a direct debit with your credit card?
The specific details will vary depending on the financial institution, but the steps generally include:
- Request a direct debit payment option through your service provider.
- Provide your chosen credit card account details (i.e. credit card number, expiry date and three-digit card verification code).
- Confirm the details and authorise the direct debit agreement.
What are the key factors to consider when using a direct debit to pay bills?
- Direct debit fees. Some service providers may charge a fee for direct debits from a credit card. This could be 1-3% of the total transaction cost, although this charge is becoming less common. Most service providers prefer that you set up a direct debit payment with them, and as such have made this a fee-free mode of payment alternative to BPAY, cheques or mail orders, etc.
- Declined payment/dishonour fees. If a payment is declined due to your card being over its credit limit, for instance, you could be charged dishonour fees twice – once by the service provider and once by your credit card provider.
- Overdraft fees. In some cases, the card provider might choose to honour the direct debit even when your account is over its credit limit. They will then charge you an overdraft fee and default interest.
- Interest charges. As with any transaction, the direct debit will be subject to interest fees if you carry a balance or if there is no interest-free period on your card. This is something you should always be conscious of when managing your credit card repayments.
- Cancelled subscriptions. If you cancel a direct debit subscription, you’ll have to make sure no more charges come off your card. If you wish to stop the direct debit payments, you’ll have to contact both your bank and service provider to ensure there is no misunderstanding and you don’t get charged any dishonour fees.
2. One-off payments
Another common option is to use your credit card for one-off bill payments, including with BPAY. This allows you to pay as you go, and can be convenient for charges that vary in amounts or are less regular.
For example, you might choose to use your credit card to make a one-off payment on your tax bill, or for paying off your car repairs. Usually you can make one-off bill payments in the same way you’d make a regular credit card payment:
|Swipe, insert or tap your card and follow the prompts to complete the transaction.||Choose “Card” as your payment option and enter your details.|
What are the key factors to consider when using one-off credit card payments to pay bills?
- Card acceptance. Not all billers accept credit card payments, and some may limit the type of cards that they accept. For example, some BPAY payments can be made with a credit card and some can't. This depends on your card, as well as how the business has set up BPAY payments.
- Cash advance transactions. Some bill payments may be treated as cash advances based on how they are processed. For example, some credit card providers consider BPAY payments as cash advance transactions. When that's the case and you use your credit card for a BPAY payment, you'd be charged the cash advance interest rate and a cash advance fee. You also wouldn't earn points. When in doubt, you should always clarify with your biller if they accept credit card payments.
- Credit card surcharges. Service providers may charge a small percentage fee of your bill for paying with credit card or BPAY, so this is something you should pay attention to as well.
- Interest charges. If your biller accepts credit card payments, the transaction will usually be treated as a purchase on your card. This means you can enjoy interest-free days as per all purchase transactions. However, as explained above, the transaction could sometimes be processed as a cash advance instead, which would immediately attract interest fees.
How to earn points for paying your bills with a credit card
Some rewards and frequent flyer credit cards offer points for bill payments and utilities, but others restrict points for specific types of bill payments. This can include:
- ATO payments
- Utility payments
- BPAY payments (especially when processed as cash advances)
The terms and conditions vary significantly between credit cards, so check what is counted as an "eligible purchase" before using your card to pay bills.
Table: When you won't earn points on a credit card
The table below includes the different providers with reward programs that let you earn reward points for most everyday purchases as well as the types of transactions that are not eligible for earning points and whether or not BPAY payments are excluded.
|Providers||Exclusions for earning points|
Excludes any charges prior to your enrolment date in the program, cash advances, travellers cheques, charges for dishonoured payments, interest charges, fees and charges associated with your American Express credit card, late payment charges, "pay plus points" transactions, promotional offers and balance transfers.
Excludes cash advance and gambling transactions, interest charges, credit card and other banking fees and charges, fraudulent transactions, foreign exchange purchases and government charges.
Ineligible transactions for earning points includes balance transfers, cash advances, interest free transactions and HSBC's special promotions, business expenses, fees or charges (including government), any value charged to your card in association with a "points-plus-pay" redemption, a transaction which HSBC decides is fraudulent or involves the abuse of a card, a disputed debit transaction and BPAY transactions.
You won't earn points for GST and government charges (including ATO payments), BPAY payments, interest and other bank fees and charges, cash advance transactions, special promotions such as balance transfers, transactions made in operating a business or in connection with business expenditure, refunded transactions and payments for credit card protection insurance.
You cannot earn points on GST and government charges. Other exclusions are interest and other bank fees, cash advances, special promotions, business transactions, refunded transactions, gambling transactions and payments for credit card protection insurance.
Bill payments from your ANZ credit card can be processed as either a purchase or a cash advance, depending on how the biller is set up with the BPAY billing service. If the payment is treated as a cash advance, you will be charged a cash advance fee and won't earn points. Other reward exclusions are interest charges, government charges, bank fees, ATO payments and balance transfers.
Excludes cash advance transactions, government charges (other than GST payable in connection with the purchase of goods or services on which you earn points), interest and other bank fees and charges, cash advances, balance transfers and BPAY payments.
You will not be able to earn reward points if your bill issuer charges the payment as a cash advance and you don't use BPAY to pay the bill. Other exclusions are government charges (other than GST payable in connection with the purchase of goods or services on which you earn points), interest and other bank fees and charges and balance transfers.
You will not be able to earn points on bills if it is processed as a cash advance or if the payment is made via BPAY. Other exclusions are cash balance transfers, special promotions, bank fees, government charges, ATO payments, business transactions and insurance charges.
As long as the transaction isn't processed as a cash advance or via BPAY, you should earn points when using your CommBank card to pay bills. Other points exclusions are ATO payments (unless made using a Business Awards card), balance transfers, foreign exchange purchases, credit card insurance premiums, travellers cheques, interest charges, Qantas Frequent Flyer Direct fees, bank fees, card account payments and transactions deemed as business purposes (unless you're using a Business Awards or Business Platinum Awards card).
Transactions that are processed as cash advances or made through BPAY or over the counter at a bank are ineligible for earning points. Other exclusions are card fees and charges, gambling and gaming costs, government fees and charges, business expenses, ATO payments, fraudulent transactions, refunded transactions, balance transfers and travellers cheques.
This excludes annual, joining and other account fees, liquidated damages, late payment charges, Diners Club rewards membership fees, government charges and fees, taxes and any other amounts that Diners Clubs declares.
Excludes government charges (other than GST payable in connection with the purchase of goods or services on which you earn points), interest and other bank fees and charges, cash advances, balance transfers and BPAY payments.
Excludes cash advances or payments made via BPAY, balance transfers, special promotions, fees, purchases of foreign currency and travellers cheques, foreign exchange and atm/bank charges, interest charges, finance charges, government charges, insurance charges, payments to loan accounts (mortgage etc), purchases in excess of limits on the account, transactions made in operating a business and all other transactions if the account is more than $10,000 in credit on all other transactions.
Excludes cash advances or payments made via BPAY, balance transfers, special promotions, fees, BPAY payments, purchases of foreign currency and travellers cheques, foreign exchange and ATM/bank charges, interest charges, finance charges, government charges, payments to the Australian Taxation Office, insurance charges, payments to loan accounts (mortgage etc), purchases in excess of limits on the account and business transactions.
Ways to make a BPAY payment and earn points
If your credit card rewards program doesn't offer points per $1 for BPAY payments, you could still be able to earn points by making the payment through another platform. Here are some key options to consider:
- Citi PayAll. If you have a Citi credit card, you can pay bills and earn points through Citi PayAll. This service offers one-off or recurring payments and can be used for most bills or even your rent. It offers 1 point per $1 for cards enrolled in the Citi Rewards program and 0.5 points per $1 for cards that earn Qantas Points or Emirates Skywards Miles.
- B2BPay. Designed for small business owners, this service gives you a way to pay billers and earn points for using your credit card. You just need to enter the biller's details, and the payment will be made through an EFT (electronic funds transfer) or BPAY.
- American Express AccessLine. If you have an Amex business card, you can use AccessLine to pay virtually any business and will earn points per $1 spent on related bills.
As well as these platforms, you may be able to pay some bills directly through BPAY if your biller is set up to accept credit card payments. Whether or not you'll earn points depends on the reward program terms and conditions, though.
Alternatively, you can see if there are other ways to pay the bill that could earn points, such as an only card payment portal or PayPal.
How else can I earn points for everyday expenses?
Apart from bills for services and subscriptions, if you're renting, then you may be able to earn even more frequent flyer points by paying with a credit card. Most real estate agents now provide this option and, depending on the payment system they use, it could be an easy way to earn more frequent flyer points for a major everyday expense.
For example, if your rent is $400 a week and you have a card that earns 1 Qantas Point per $1 spent, you would earn 1,600 points per month. Over a year, you'd rack up 19,200 Qantas Points just from paying your rent. That's enough for a return economy flight from Sydney to Melbourne (16,000 points), a one-way flight from Cairns to Bali (14,400 points), or a one-way flight from Melbourne to Auckland (18,000 points).
If making bill payments are considered an eligible transaction, using a credit card to cover your bills can be a rewarding way to earn points on an essential expense. As rewards and frequent flyer credit cards usually charge high interest rates, it's only worth it if you pay your balance in full each month and won't be charged any interest on these transactions. If you do rack up interest, the debt you'll collect will quickly outweigh any perks you get from earning points.
Compare frequent flyer credit cards
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
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