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.
Paying every bill with credit — expenses like car insurance, health insurance premiums, groceries, gas, and internet service — can add up to huge rewards that could cover extra expenses like travel experiences or large purchases.
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? Enter: Plastic.
What is Plastic?
Plastiq 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 then 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 2.85% of each bill you pay.
When does it make sense to pay bills with Plastiq?
Paying a 2.85% 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.
1. When the rewards are more valuable than the fee
If you’re paying a 2.85% fee to use credit, but earning more than that amount in rewards, then using Plastiq can make sense.
If you paid a 2.85% fee to pay a hefty mortgage or another 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 welcome bonus
Many of the top travel and rewards credit cards offer huge welcome bonuses to those who can meet minimum spending requirements. Take the Chase Sapphire Preferred Card, 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 2.85% fee if it helps you earn a large welcome bonus.
The Capital One Venture Rewards Credit Card is another great option that comes with a one-time bonus of 60,000 miles once you spend $3,000 on purchases within three months from account opening, equal to $600 in travel.
Even if you paid all $4,000 in bills through Plastiq to earn the welcome bonus, you’d fork over $114 in fees to earn $625 in travel. Not bad at all.
3: When you’re trying to reach a spending limit to earn status
Many hotel loyalty programs offer status perks for customers who carry their co-branded hotel cards and meet certain spending requirements.
That said, you shouldn’t pay $30,000 in bills through Plastiq to earn a hotel elite status; that would cost $764 in fees! But it could make sense if you’re getting close to the threshold and need some additional spending to put you over the limit.
Hotel elite statuses can offer things like late check-out, free night stays, and room upgrades when they’re available. Some provide considerable value to their members.
[This article was first published on The Simple Dollar in 2020. It was updated in March 2022.]