Credit card to pay utility bills? 12 January at 2:45PM in Credit cards 11 replies 522 views

Banana_Anna_2709

Hi everyone, I'm a long time lurker but this is my first post. 
Apologies if this is answered already but I had a search (on here and on the internet) and couldn't see anything about it. 
So I'm thinking about getting a reward credit card for everyday spending - groceries, petrol etc. 
I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops? 
Obviously if there are charged it negates any reward so I wouldn't want to do that! 
Thanks everyone ☺️

grumbler

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

[Deleted User]

grumbler said:

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

Topping up a current account seems like a pointless extra step.

Yes, you can pay towards many utilities with a personal Visa or Mastercard (debit or credit) - less so common with an Amex.

'Variable DD every 3 months' is usually just billed usage paid in full & this is a variable amount; the other option is a flat payment that balances out over the year. 

Banana_Anna_2709

grumbler said:

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

Sorry if I wasn't clear - a variable direct debit comes out of my bank ever 3 months (after receipt of the bill), as opposed to it being a fixed monthly direct debit which builds up on the account, to pay for the electricity and gas I've used. 
I wasn't asking about topping up a current account, but making a payment to my energy provider - the website says they accept debit or credit cards but what I'm not clear about is whether the credit card provider would treat this payment as a cash advance and charge interest straight away. 

Banana_Anna_2709

Deleted_User said:

grumbler said:

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

Topping up a current account seems like a pointless extra step.

Yes, you can pay towards many utilities with a personal Visa or Mastercard (debit or credit) - less so common with an Amex.

'Variable DD every 3 months' is usually just billed usage paid in full & this is a variable amount; the other option is a flat payment that balances out over the year. 

Thanks, I didn't mean topping up a current account, that's a misunderstanding, I was asking about making a payment to my energy bill in advance of the variable DD coming out in order to get whatever rewards are offered from the Credit Card provider (still looking around, I've never had a credit card so it's all new to me!) I'd only be doing it for the rewards and would pay in full every month rather than using it to spread payments or anything, so any charges would negate any rewards. 

Ebe_Scrooge

Payments towards utility bills are not usually classed as cash-like transactions, so you should be OK.  I guess the belt & braces way could be to make a small payment by CC, then keep an eye on you credit card account and see what it's statemented as.  You can then pay the full balance immediately if it does happen to be classed as cash, and you'll only be charged pennies in interest plus a fairly small cash fee.

But in all likelihood it'll be fine.

grumbler

Banana_Anna_2709 said:

grumbler said:

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

I wasn't asking about topping up a current account, but making a payment to my energy provider - the website says they accept debit or credit cards but what I'm not clear about is whether the credit card provider would treat this payment as a cash advance and charge interest straight away. 

This for sure will be a purchase, not a cash transaction. However, many energy providers give a discount for paying by a DD that is likely to be bigger than any rewards you get from a CC.

Ebe_Scrooge

grumbler said:

Banana_Anna_2709 said:

grumbler said:

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at the shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

I wasn't asking about topping up a current account, but making a payment to my energy provider - the website says they accept debit or credit cards but what I'm not clear about is whether the credit card provider would treat this payment as a cash advance and charge interest straight away. 

However, many energy providers give a discount for paying by a DD that is likely to be bigger than any rewards you get from a CC.

I was going to say this as well.  However, if the OP is on variable quarterly DD and they make a partial interim payment via CC, wouldn't they still get the discount for paying by DD?

Banana_Anna_2709

Ebe_Scrooge said:

grumbler said:

Banana_Anna_2709 said:

grumbler said:

Banana_Anna_2709 said:

I was wondering, if I were to use the card to top up my utility bills account - currently I pay by variable DD every 3 months but I can make interim payments between bills - would this be treated as a cash advance so I'd need to pay interest/fees or would it be treated just like a normal payment eg at of shops?

How can you 'top up' a current account with a credit card? The only way is to use 'money transfer' option in your CC online account, but most cards will charge a fee for this and undoubtedly this will be a cash transaction, not a purchase.

That said, some bills can possibly be paid by a CC instead of a DD. E.g. NowTV use a CPA and for this either a debit or a credit card can be used. IIRC some councils used to accept CCs for council tax payments.

And I don't understand the "variable DD every 3 months" bit.

I wasn't asking about topping up a current account, but making a payment to my energy provider - the website says they accept debit or credit cards but what I'm not clear about is whether the credit card provider would treat this payment as a cash advance and charge interest straight away. 

However, many energy providers give a discount for paying by a DD that is likely to be bigger than any rewards you get from a CC.

I was going to say this as well.  However, if the OP is on variable quarterly DD and they make a partial interim payment via CC, wouldn't they still get the discount for paying by DD?

This is what I was hoping 🤞

Banana_Anna_2709

Thanks everyone - I've been trying to reply individually but can't seem to get it to post - not sure if it's the phone or me 😜 
My idea 💡 is that say the bill is £550, I would then pay £500 in advance of the DD date by credit card, and the remaining £50 would come out by DD as normal so still making me eligible for the lower DD rate. 
Good idea to try with a small amount and see if any charges are brought, thank you. 

Ebe_Scrooge

Banana_Anna_2709 said:

say the bill is £550, I would then pay £500 in advance of the DD date by credit card, and the remaining £50 would come out by DD as normal so still making me eligible for the lower DD rate.

You just need to be aware of the timing of the manual payment.  Not sure about utility companies, but for most credit cards the DD amount is calculated in advance of the DD being taken - it's usually done automatically by computer in batch cycles.  It will vary from company to company, but the basic principle is some thing like:

On a Friday night a computer batch process runs to calculate all the DD amounts for customers whose DD is due next week.  Let's say your DD is due the following Thursday.  If your bill as of Friday night was £550, then the batch run will set up a DD to take £550 next Thursday.  If you make a manual payment on Tuesday (after the Friday batch run), the DD for £550 will still be taken when it's activated on Thursday (because you owed £550 at the time the DD was generated).

If, however, you pay £500 on the Thursday before the Friday batch run, then the DD will be calculated as £50.

Hope this makes sense.  Precise timings will vary.  Some companies may well generate the DDs every day, in which case you'll be fine.  But it's more common for DDs to be batched up as described above, whether it's weekly, every other day, every four days, whatever.