Twice a week, our CEO and resident money guru Jean Chatzky tackles your burning questions in the HerMoney newsletter. We’ve pulled some of the best to feature on our website — and this one made the cut! Got a question for Jean? Send it her way right here.
Q: Do you have any opinions regarding putting regular monthly expenses (like utilities) on credit cards (and then paying the card balances in full each month)? I’ve always paid for these expenses directly from my bank account, but am thinking that there might be some benefit to getting card points/airline miles, etc. by going the card route.
A: I do this, for the record, and was just commenting on how long it’s been since I sat down at my computer to pay a stack of bills like I used to do a couple times a month. The airline miles or other points add up much quicker when you load as many expenses as possible on your card of choice. So, yes, I would say absolutely go for this. But, you’re going to want to be careful about putting those credit card bills themselves on autopay.
In this Wall Street Journal article, reporter Imani Moise drew a direct line between the fact that the number of credit card bills paid by automatic payment doubled from 2015 to 2020 and the fact that total interest and fees on credit cards rose by almost 20% during the same time period. She cites a study by University of Illinois finance prof Jialan Wang that shows customers often pay off a smaller chunk of their balance when they autopay and as a result wind up having to bear bigger interest charges than those who pay their bills manually.
To keep yourself on the straight and narrow, when you enroll in autopay for your credit card (or cards), make sure you elect to have the full balance withdrawn (rather than make a minimum payment). And, if you’re afraid you might get caught short, set up the autopay on a day you know your account will be at its flushest – like right after your paycheck lands.
MORE ON HERMONEY:
- Debt Relief Programs Explained: What They Are And How They Work
- Ask Jean: Should I Use My Tax Refund To Build Savings, Or Chip Away At Credit Card Debt?
- A Smarter Way to Think About Credit Card Fees, Perks, And Points With Your Rich BFF, Vivian Tu
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