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How to Turn Credit Card Points Into Bill Payments
December 12, 2024
Ways to Use Credit Card Points to Pay Bills
Paying bills with points isn’t always as simple as swiping a card, but it can be done through a few clever methods. Here are the main ways to convert your credit card reward points into bill payments:
Redeem Points for Statement Credit
The most straightforward method is applying your points as a statement credit on your credit card. This reduces your card’s balance, indirectly covering purchases or bills you’ve charged to that card. For example, if you have $50 worth of points, you can wipe out $50 of recent bill charges on your statement. Keep in mind: a statement credit lowers your balance but typically doesn’t count as the monthly minimum payment due. You’ll still need to pay at least the minimum amount with cash to avoid late fees (more on this pitfall later).
Redeem for Cash or Check, Then Pay the Bill
Most reward programs let you cash out points (either via bank deposit, mailed check, or transfer to a checking account). For instance, Chase Ultimate Rewards allows cash transfers at ~1¢ per point rate. Once you’ve cashed out, you can simply pay your bill with that money. This two-step approach is a safe bet – you’re essentially turning points into cash, then using cash to pay any bill. It’s a bit old-school but ensures the payment is received normally (since you’re paying like you would with any other money).
Use “Pay with Points” at Checkout
Some issuers and platforms let you apply points during a payment transaction. For example, certain online bill pay portals or services (like PayPal) allow linked credit card points to be used at checkout. If your utility company or phone provider lets you pay via PayPal, you could use, say, your Amex or Citi points to cover part of the charge through PayPal’s point-redemption feature. This is convenient, though the value per point might be lower (often ~$0.005–$0.01 per point). Make sure you check the conversion rate before using this option.
Special Bank Programs
A few banks have (or had) niche programs to pay bills with points. Citi, for instance, experimented with letting banking customers use ThankYou points to pay bills. In Canada, RBC Rewards allows direct bill payments from points (e.g. pay your utility bill via online banking using points). These programs are not common in the U.S. yet, but keep an eye out with your bank. If available, they can be convenient – though they usually redeem points at the standard cash rate (again, often 1¢ per point).
Gift Cards or Prepaid Cards
When direct methods fall short, there’s a crafty workaround: convert points to a Visa/Mastercard gift card (or an Amazon gift card for an expense you have there, etc.). Many issuers let you redeem points for general-purpose gift cards. For example, you might get a $50 Visa gift card in exchange for 5,000 points. You can then use that gift card to pay a bill – either by inputting the card number online or even paying in person. It’s essentially turning points into a payment card. Pro tip: ensure the gift card is sufficient to cover the bill or that the biller accepts split payments, to avoid any remaining balance on the card.
Is Using Your Points to Pay Bills a Good Idea?
Now that we’ve covered how to do it, you might ask: should you do it? The answer: it depends on your situation and goals. Here are a few considerations:
Travel vs. Bills – Value Trade-Off
Credit card points are often most valuable for travel rewards. For example, using points for a flight or hotel might get you 1.5–2 cents per point in value, whereas using them for a statement credit usually gives around 0.5–1 cent per point. If you have travel plans and can use points for a $500 flight, that could beat using the same points to cover a $300 utility bill. “Rewards points often provide better value when used for travel rather than bill payments,” notes one expert. Card issuers purposely make travel and partner redemptions attractive. So, if you’re not in a rush financially, you might get more bang for your points by saving them for a vacation.
When Points-for-Bills Makes Sense
On the other hand, there are times when using points to cover bills is perfectly sensible. About 29% of Americans redeem rewards points every month to help pay bills. Why? Likely to free up cash when budgets are tight. If you’re facing a high bill or a tight month, it can be a relief to erase $50 or $100 of expenses using points. For example, during the holidays or an emergency, covering your gas or grocery bill with cashback from points can keep real money in your pocket. “If you need immediate financial relief, using rewards to pay bills makes sense,” says Kelli Hobbs, a loyalty rewards expert. In short, points are there to benefit you – if covering a bill helps you avoid debt or stress, it can be the best use of them, even if the redemption value is lower.
Mix and Match Strategies
You don’t have to be all-or-nothing. Some people strategically use points for bills occasionally. For instance, maybe you always use your points for travel, but once a year you’ll redeem a small chunk to offset an annual insurance bill or a splurge. This way, you enjoy rewards in multiple ways. Just avoid a scenario where you drain points for minor bills if you’re saving for something bigger that you truly want (like a free flight).
Check for Bonus Redemptions
A few issuers run promotions that give extra value when you redeem for certain categories. Chase’s Pay Yourself Back is an example – at times they’ve offered 1.25–1.5x value on points if used to erase dining or grocery purchases (which are essentially bills). If programs like that are active, using points for those bills becomes a much better deal. Always check your card’s rewards portal for any “boosts” or special offers before redeeming.
When juggling multiple cards and rewards, let Kudos be your smart companion. Our free browser extension helps auto-apply the best card at checkout to maximize points – so you earn more points to later pay those bills! It also tracks your rewards across cards. Use code GET20 when signing up for Kudos to get an extra $20 bonus on us (because who doesn’t love more rewards?).
Maximizing Rewards and Avoiding Pitfalls
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Using points for bills is pretty easy, but there are a few important tips and common pitfalls to keep in mind to ensure you’re doing it right:
Always Pay Your Minimum Due
This is crucial if you’re trying to pay a credit card’s bill with its own points. Even if you apply points as a statement credit, you must still make at least the minimum payment with actual money that month. For example, say your statement is $500 with a $50 minimum due. If you redeem $500 in points, your balance may go to $0, but you’d still owe that $50 minimum as a payment. It sounds odd, but banks treat point credits differently than a normal payment. Failing to pay could result in a late fee (and in our example, that actually happened to someone!). So, treat points as a boost, not a substitute, when it comes to meeting due dates.
Compare Value Before You Redeem
As mentioned, not all redemptions are equal. Check your issuer’s site for how much your points are worth for cash/credits. Typically it’s $0.01 per point (1,000 points = $10) for most cash redemptions. Some are worse (e.g. certain programs give only $0.005 or $0.006 per point on statement credits). If you’re getting significantly less than 1¢, you might reconsider or only redeem what you need. On the flip side, if you have a cash-back card that gives full 1:1 value, it’s a green light to use those rewards as you please – you’re not leaving value on the table.
Use the Right Card for the Right Bill
Not all bills can be paid with a credit card directly (some landlords or service providers don’t accept cards without a fee). But you might have indirect avenues – for example, the Bilt Mastercard allows you to pay rent via their app with no fee, earning points, and you can later use those Bilt points to cover rent itself. Another example: some insurance or tax payments can be made with a card (often with a fee) – if you’re working on a sign-up bonus or have points to burn, it could be worth it. The key is to leverage cards that maximize rewards on those bills (for earning) and give flexible redemption options (for using points). Kudos can help by reminding you which card to use for which bill to rack up the most points in the first place!
Don’t Forget Other Redemption Options
If your goal is essentially to free up money for bills, you might not always need to redeem points directly toward those bills. For example, you could redeem points for an Amazon gift card to buy essentials, which frees up cash for other bills. Or use grocery store reward redemptions (some cards let you redeem at the register for groceries). Those aren’t literally “paying the electric bill with points,” but they effectively save you money that you can reroute to bills. Think of your budget holistically: any expense you offset with points = cash saved for something else.
Watch for Fees or Restrictions
Using points themselves usually has no fee (you earned them, they’re yours), but be mindful if you’re using any third-party services. For instance, Plastiq (a service that lets you pay bills with a credit card where cards aren’t accepted) charges a fee – it can help you earn points by paying a bill with a card, but it doesn’t help use points. On the flip side, using PayPal’s Pay with Points has no fee, but you must have enough points available at the time of purchase. Also, check that whatever method you use doesn’t forfeit other benefits – e.g. if you use points to “erase” a travel purchase, make sure you don’t lose travel insurance coverage (some cards might require the purchase be paid in full with the card to qualify for insurance perks).
FAQ: Using Credit Card Points for Bills
Can I pay my credit card bill with reward points?
Yes, you can redeem points for cash or a statement credit to effectively pay down your credit card balance. However, using points this way will not count as your monthly payment to the bank. You must still manually pay at least the minimum due to avoid late fees. In practice, a points redemption simply reduces what you owe, but you still need to make a payment that month.
Do reward points have the same value when used for bills?
No, usually not. In most cases, points are worth around 1 cent each or less for bill credits. For example, 10,000 points might equal $100 as a statement credit. This is often lower than their value for travel or other redemptions (some travel redemptions can yield 1.5–2¢ per point). Using points for bills is about convenience and relief, not maximizing monetary value.
Is it smart to use credit card points to pay utility or phone bills?
It can be – in the right circumstances. If you have plenty of points and could use some budget breathing room, paying a utility bill with points is fine. Many people do it for recurring bills like utilities or streaming services by wiping those charges from their statement. Just remember the trade-off: you’re trading those points for a short-term benefit (no out-of-pocket cost for the bill) versus potentially better long-term value (like free travel). It’s smart when you need it, but if you don’t need to, you might save the points for a higher-value reward.
How do I actually redeem points for a bill credit?
Typically through your card’s online portal. Log in to your credit card account online, navigate to the rewards or redemption section, and look for an option like “Redeem for Statement Credit” or “Pay with Points.” You might be able to select a specific recent transaction (e.g. your electric bill charge) and apply points to offset it – some programs (like Chase’s “Pay Yourself Back”) allow this. Otherwise, you redeem a lump sum of points and it will just credit your account. The credit usually appears within a few business days as a line item on your statement.
What about using points to pay rent or mortgage?
Directly applying points to rent or a mortgage is rare, but you can do it indirectly. As mentioned, the Bilt Mastercard is unique in letting you pay rent and even use its points toward rent. For other cards, a workaround is to redeem points for cash, then pay your landlord or mortgage lender with that cash. Some people also use points for gift cards to home improvement stores or supermarkets, freeing up money for rent. Unfortunately, there’s no widespread “pay your mortgage with points” option yet in most rewards programs.
Conclusion: Turning Points into Peace of Mind
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Using credit card reward points to pay your bills can be a smart move when done right. It’s like having a financial safety valve – if money is tight, those accumulated points can cover a bill and grant you breathing room. We’ve walked through the how-tos (from statement credits to savvy workarounds) and the pros and cons. Remember, while travel rewards might stretch your point value further, life happens – and covering an electric bill or phone bill with points is perfectly okay when it helps you out.
Finally, make sure you’re earning points efficiently so you have more to use! That means using the right card for each bill and taking advantage of bonus categories. If you’re not already using Kudos, give it a try – it’s like having a friendly neighbor who reminds you which card gives 5% back on your groceries and alerts you of rewards about to expire. And if you’re new to Kudos, don’t forget to use code GET20 for a special $20 welcome bonus on us. 🎉 Every point (and dollar) counts!
Now you’re equipped to pay your bills with reward points wisely. Enjoy that feeling when points erase a bill – it’s one of the little joys of savvy credit card use, and you’ve earned it!
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