Is it better to pay credit card bills through the online bill pay service offered by my bank or from my credit card's website?

Question

I have a Radius Bank checking account with a bill pay service and a Capital One credit card. I can pay my credit card bill from either website. Is there any advantage to using Radius's over Capital One's, or vice versa, to pay my credit card bills?

Answer 1

In my experience, it is better to pay on the vendor's (in this case, credit card's) website, rather than your checking account's bill pay service.

I've personally had trouble with my bank's bill pay service. When you pay with bill pay, there is usually a delay of at least a few days before the payment arrives at the destination. Sometimes the payment gets there late. Sometimes the recipient doesn't know how to credit the payment when they get it. This has caused me to miss due dates and created a mess.

When you pay with the credit card's own website, the effective date of payment is immediate. If you schedule a future date, you can pick a precise date for the payment to be credited. (Although, I always pay my bills a few days early to be safe.)

Of course, your bank's bill pay service might be better than mine. But I've had lots of trouble with mine, and I don't use it anymore.

Answer 2

In my experience, a payment often processes and is credited to the credit card account sooner when I make it via ACH transfer (the usual way when paying through the credit card site) signed in to my credit card online account. If credited more quickly, it's usually by a day, occasionally two days. (By the way, I've never had a credit card company fail to credit the payment correctly toward my card balance, though I don't say it can't happen.)

One advantage to paying with your bank's bill pay feature, not exactly in answer to your question, but related: You can make a payment this way when the credit card site won't let you pay. Specifically, when you've made purchases with the credit card, but they haven't yet posted to the account.

This can happen, unsurprisingly, when you've incurred charges quite near the closing date of your credit card. It can also come about unexpectedly when there's a delay in the charge being submitted or posted. This often occurs when the customer isn't charged until the item ships and there's a delay in shipping. I've had this experience frequently when buying items on Amazon, especially with via Subscribe & Save.

So, you might want to have a zero or negative balance reported on your card's closing date, it's getting close to that date, and you've made purchases that are not showing up or are still pending, seeming likely to come trough without leaving you time to pay through the credit card site. In this case, you can pay the amount you spent, or more, via your bank's bill pay, and have the desired zero, or a negative, balance on that month's closing date.

The downside, of course, is that it's not always clear exactly how soon the payment via your bank's bill payer will be submitted, received, and credited by the credit card company. In my case, I've always been able to achieve the desired result, though haven't always been confident, ahead of time, that it would work out that way.

Answer 3

Paying by credit card means that the recipient of the payment needs to pay the issuing bank a "swipe fee," or processing fee. This fee can be as high as 3.5% for some cards.

When you pay by ACH transfer from your checking account, there is still a fee, but it is considerably less than when you pay using a credit card, typically well below 1%.

Say, for example, you were paying a $100 cell phone bill. Regardless of how you pay-- credit card or ACH transfer-- the cost to you is $100. But the recipient of your payment could receive as little as $96.50 if you paid by credit card and the swipe fee on your card was 3.5%, or if you paid by ACH transfer they could receive close to the full amount, like $99.90 if the fee for processing the ACH transfer was 0.10%.

Since the discussion here is focused on paying bills, presumably for which you've been invoiced, etc., I'll simply provide a link to an article which mentions other facets of the ACH vs. credit card payment issue.

From your perspective, deciding whether to pay via ACH transfer or credit card-- assuming you can choose either in a particular situation-- probably boils down to what you get from the transaction. If your card is some kind of reward-generating card, like the CapOne Venture card, which rebates 2% to you in the form of non-transferrable points, then obviously it would probably be preferable to use the card to pay. However if your card does not reward you for use, then it makes no difference to you.