Plastiq Review: Pluses and Minuses of Paying Bills via Credit Card Plastiq Review: Pluses and Minuses of Paying Bills via Credit Card

Plastiq Review: Pluses and Minuses of Paying Bills via Credit Card

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The landscape of paying bills with credit cards has changed, so it's worth overhauling our review of Plastiq — a service that allows you to pay nearly any bill with a credit card. While providing opportunities for increased spending is a positive, Plastiq charges fees for doing so. Are those fees worth it? And how does Plastiq work? Here's a look at the pros and cons of using Plastiq to pay your bills.

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Plastiq allows you to pay every bill—including rent, mortgage, and tuition—with a credit card. They will even allow you to pay a bill just by taking a photo of it with their app. Most importantly, Plastiq can send payments to any business, institution, or person who has provided a good or service in the U.S. or Canada. Recipients do not need to have a Plastiq account.

This essentially allows you to pay “you can't pay with a credit card” bills on your credit card. Thus, you can put nearly all of your spending on credit cards. This provides for increased rewards on daily spending and quicker completion of spending requirements for bonuses or new card welcome offers.

Related: Credit Card Bonus Offers – A Beginner's Guide

How Plastiq Works

Plastiq Review: Pluses and Minuses of Paying Bills via Credit Card

Using Plastiq is easy:

  1. Create an account with Plastiq.
  2. Select a business that’s already in Plastiq's system or choose to add your own.
  3. Pick a card (American Express, Visa, Discover, Mastercard, and Diners Club are accepted) and add it to your Plastiq account. You may save as many cards as you want in your Plastiq account profile.
  4. Create a payment with the account number on the bill, amount due, and payment date. You can even schedule payments for the future or make recurring payments of the same amount.
  5. Your payment is guaranteed to arrive on time in the form of a check or bank transfer.

Plastiq payments can be made either by sending a check or processing a bank transfer. Bank transfers are sent electronically and typically arrive within 3-5 business days. Obviously, you will need to know the recipient's bank information to set this up. If you don't know it, use the option for a mailed check.

Checks are sent via standard postal service and should arrive within 5-7 business days. Luckily, Plastiq's calendar asks you when the payment is due, and they will figure out when to send the payment by planning backward from the due date.

What if Plastiq misses your payment due date? If you submitted the payment on time and with the correct due date, Plastiq will cover 100% of any late fees incurred on that payment.

Limit on Card Types for Some Payment Categories

The concept of Plastiq is simple, which is a strength we should highlight in this review. However, not all payments can be made with all credit card types. This reduces the overall strength of Plastiq as a form of bill pay.

Perhaps the biggest limitation is that you can't use personal Capital One credit cards to make payments through Plastiq. Capital One business cards can be used — subject to limitations.

There is a detailed chart available here to see which bills can be paid with which credit card types. It's long, so we will focus on some popular types of bills you might want to pay via credit card where the merchant itself doesn't accept credit cards.

  • Labor contractors – Not American Express
  • Mortgage – Not American Express, not Visa credit (only debit), not Capital One business cards
  • Rent – All cards, but you might need to provide a copy of your lease.
  • Student loans – Not American Express, not Visa credit (only debit), not Capital One business cards
  • Tax payments – All cards
  • Timeshare – Not American Express
  • Tuition – All cards
  • Utilities – All cards (except American Express for telecom / internet)

As you can see, paying contract laborers for work on your house, timeshares, and mortgage payments cannot be done with American Express cards. You also can't pay mortgage payments or student loans with Visa credit cards (only with Visa debit cards).

This limitation on types of cards for types of transactions is a downside. If your plan is to put large payments like mortgages onto credit cards to meet spending requirements for a welcome offer or spending bonus, that only works for certain types of cards.

Service Fees

As should be expected, there is a service fee associated with payments sent via Plastiq. After all, they are a business.

Recipients pay nothing to receive payments with Plastiq. Senders pay the fees, which are outlined here.

  • Credit and debit card payments: 2.85% fee
  • Wire transfer payment: $40 in the U.S., $60 international
  • Bank-to-bank ACH transfers: free

For our purposes, we are looking at making payments with a credit card. That will incur a 2.85% fee. Is it worth it? We'll analyze that in a bit. For comparison, PayPal charges 2.9% + 30 cents to send money with your credit card as a source (not purchases, but bill pay / person-to-person payments). So, when it comes to fees, Plastiq comes out ahead.

Additionally, Plastiq often runs promotions that bring the service fee down to below 2%, such as via bulk or recurring payments. In some rare instances, Plastiq has even removed service fees altogether in the past for utility payments. Most of Plastiq's promotional service fees have required payments with a MasterCard.

What Types of Payments Are Not Allowed?

Plastiq will not allow you to send a payment to yourself or your spouse. They will also not allow any type of payment initiated for the sake of sending money. A legitimate good or service must be provided, and Plastiq may request proof of such good or service.

Review of Plastiq Fees – Are They Worth It?

We will consider the 2.85% fee on credit cards as the standard for our comparison. Here, we will look at fees, rewards that could be earned, and then analyze the net value.

Plastiq Review: Pluses and Minuses of Paying Bills via Credit Card
Recent Plastiq payment for mortgage using Citi Premier® Card

Additionally, most Plastiq payments tend to categorize as “business services” or “miscellaneous” on your credit card statement. Thus, they typically won't trigger any bonus category spending. Therefore, we won't factor category bonuses into this equation.

Card Earning RatePoints Earned on $100 Payment
($102.85 after fee)
Fee Per Point Generated
1X1032.77¢
2X2061.38¢
3X3090.92¢

Since most cards earn just 1 point or mile per dollar spent, even in the best situations you are probably paying more to get the points than what the points are worth. So when would using Plastiq make sense?

Meet minimum spending requirements

Using Plastiq can help you meet minimum spend requirements more easily. For many people, their largest expense each month is housing. Putting your rent / mortgage payment onto a credit card can shift considerable spending onto a credit card, easily meeting your welcome offer requirements.

In these situations, is it worth it? It depends on the person, but let's review those Plastiq fees when considering a lump of points. Here, we'll imaginee putting $3,000 of spending onto a card via Plastiq and some potential points that could be earned this way. Paying $3,000 through Plastiq would cost $85.50 in fees. But here's what it can earn you:

Welcome OfferPoints Earned (Including 1X earning on spend)Fee Per Point Generated
50,000 Points53,0860.16¢
80,000 Points83,0860.10¢
100,000 Points103,0860.08¢

If you assume that you would be paying that $3,000 anyway (you have to pay for your housing each month, whether you use Plastiq or not), the fee becomes the real differentiator. Is it worth it? For many, meeting several additional credit card sign-up bonuses each year by paying your mortgage is going to make sense.

While using Plastiq for daily spend likely isn't worth it, a review of the fees for earning a welcome offer tells a different story. Consider a person who pays $2,000 a month in mortgage payments. If paid with Plastiq, that person would pay an additional $684 in fees over the course of a year. However, by doing so, they could meet the spending requirements for 3-4 new credit cards per year just from this one monthly payment.

Profiting with Plastiq

One instance in which it can be of great value to send payments with Plastiq is when you can profit from the transaction. This would be the case, for example, if Plastiq was running a promotional service fee of 1.5% on MasterCard payments and you had a MasterCard that earns 3% cash back on all purchases.

In a situation like this one, if you send $5,000.00 in payments with Plastiq, you would be paying $142.50 in service fees to Plastiq. However, you would earn $154.28 in cashback from those payments (counting the $5,000 and the fees, since you will earn credit card rewards on the total spend). By using Plastiq you earned a profit of $11.78.

Another example would be Bank of America's Preferred Rewards. Those that have Platinum Honors status receive a 75% bonus on credit card earnings. The Bank of America® Premium Rewards® credit card earns 1.5 points on everyday purchases, plus your 75% bonus from Preferred Rewards. That's a total of 2.625 points per dollar, which you can cash out at 1 cent per point. Your earnings of 2.625% back is slightly less than the typical Plastiq fee, but during a promotion it becomes profitable.

Comparative Review of Plastiq and Bilt for Rent Payments

A recent arrival in the credit card world is Bilt Rewards. We previously analyzed this program here. Considering that the whole concept of Bilt is to eliminate fees on rent, it's worth a comparative review against Plastiq to see if Plastiq is no longer “worth it” now that a no-fee option exists.

A few key points are worth highlighting at the outset:

  • Bilt is only for rent payments, so other categories of payments would still require Plastiq or another bill pay service.
  • To avoid paying fees with Bilt, your landlord must join the Bilt Rewards Alliance, and you must pay through the app.
  • If you can't meet those requirements, you must pay using the The Bilt Mastercard®.

At this point, the comparison on paying rent via Bilt vs Plastiq comes down to the following decision factors:

  • Can you meet the minimum spending requirement on your new credit card without Plastiq? If so, paying your rent via Bilt saves money.
  • Is this ongoing spend, where you aren't earning a large chunk of points (bonus offer, welcome offer)? If so, the fees on Plastiq wouldn't be worth it.
  • Largely, the question is this: is the cent per point acquisition higher than the cent per point value when redeeming?

Depending on the situation, the fees on Plastiq become “worth it” or “not worth it” depending on your situation. If you can save money by avoiding fees, great! If you can't earn a bonus without funneling some payments through Plastiq, then the fees will likely be justifiable to you.

Conclusion

Plastiq is an excellent resource that makes credit card payments possible when a merchant does not accept credit card payments. By sending payments via Plastiq, you earn points, miles, and cash back for transactions that would otherwise not reward you in any way.

While the amount of points you can earn by sending payments through Plastiq is significant, no review can avoid discussing the fees. It's not free, after all. Consider whether the points and miles you are earning are worth more than the fees you're paying.

Interested? Click here to sign up for an account with Plastiq.

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