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Does making all one's payments (including house rent, etc.) through a credit card make sense, if privacy is not a concern? If I am planning to pay completely within no interest period (first ~45 days), would it help improve credit score?

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Which landlord allows you to pay house rent by credit card ?? In UK atleast, if you pay by direct debit(mean more or less like cash but with safety guarantees) they give you discounts on your bills, but with credit cards they charge you a processing fee. –  DumbCoder Mar 4 '13 at 13:32
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4 Answers

up vote 2 down vote accepted

If you are going to make those purchases any way, and there is zero cost to you, and you make all the payments on time then you can use this to do several things:

  • Cash management: You only make one or two payments a month.
  • Maximize rewards: you move additional items onto the cards to increase your cash back.
  • Credit Usage: in the short term you will be utilizing more of your credit, which can hurt your score. But a sustained period of paying it off each month should mean the credit card company will increase your credit limit.
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I'm not sure the last bullet point is true. AFIK Credit reports always show the card's credit limit as outstanding balance regardless of the actual usage of the card. That's one reason to keep the number of cards and the total credit limit somewhat limited. –  Hilmar Mar 5 '13 at 13:08
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@Hilmar - mhoran_psprep is correct in his bullet list –  warren Mar 5 '13 at 19:26
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@Hilmar - I believe there are "Charge Cards" which 1.) show the balance as the limit and 2.) require being paid off at the end of each statement period. These are different from credit cards which allow a balance and report differently. Charge cards are also rarer (in my experience.) –  MrChrister Mar 6 '13 at 17:27
    
@warren it's not using your credit that can hurt your score, it's if you are carrying a high balance relative to your credit limit –  JAGAnalyst Mar 7 '13 at 21:07
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Depends on what your definition of "makes sense" is. Some credit cards offer cash back, so you might actually save 1% or so on your payments. However, credit card payments incur higher fees then, say, a debit card or an e-check. If the seller absorbs that fee, then this may be okay for you. Large ticket items such as college tuition, mortgage, car etc. typically won't accept credit cards or pass the fee on to you. I have also seen a trend where community bills (water, excise tax, etc) and even gas stations charge you extra fees for using a credit card, in which case it doesn't make sense.

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You would have to factor in the type of credit card (annual fee?, interest rate?, rewards?, etc), if seller absorbs processing fee, factor in your spending habits, your financial health, etc to be able to consider whether it's worthwhile or not.

For me, I pay my rent via credit card due to no processing fee so its a no brainer. I began to add other personal expenses as well. I started doing this primarily for the rewards/bonus. There are some great credit card offers out there right now, some with enticing sign up bonuses. For one of my credit cards, within a month, I was able to get over 40,000 points which I could redeem as cash, travel, amazon purchases, and other options.

Most credit cards I've seen offer somewhere around 1 to 2% cash back but there are niche cards like for spending on groceries that offers higher returns but usually have an annual spending cap.

The most important thing to realize is your ability to whether or not fully payback your monthly statements. You have to be responsible here. Otherwise, you will incur ridiculous interest rates. Also, If you sign up for a credit card that has an annual fee but want to avoid it, just grab the bonus or use it before the effective charge date and then cancel it, assuming all outstanding dues have been satisfied (called credit card churning).

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There is a strong consumer protection argument for using credit cards wherever possible. If your card is stolen/cloned, or if you need to issue a chargeback, it's the bank's money that's on the line, not yours.

Also, in the UK at least, credit card purchases of between £100 and £30,000 are subject to additional protections, as set out in section 75 of the consumer credit act 1974 - effectively, if you buy something with a credit card, it's as though the bank bought it and then re-sold it to you, so if something is wrong with your purchase you can get a refund, even if the supplier goes bankrupt. You do not get this extra layer of protection when paying via debit card / cheque / cash. More details here.

Does anyone know if there is similar legislation in other jurisdictions?

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In the US, there are good protections are personal cards, but NOT on business cards. Beware. –  MrChrister Mar 29 '13 at 15:50
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