Can You Pay Insurance With a Credit Card?

Car and renters insurance are the easiest to pay by card. Health, disability, and homeowners insurance are often paid some other way: through your paycheck or your mortgage. Whether a card makes sense comes down to whether your insurer charges a fee for it. If so, it’s usually bigger than any rewards you’d earn.

Types of insurance you can pay with a credit card

Each insurer sets its own payment options, so check your insurer’s payment page or app.

Car insurance

Most car insurers let you pay online or in their app. You can usually choose a monthly payment or pay the full term up front.

Homeowners and renters insurance

If you have a mortgage, your lender may collect your homeowners insurance as part of your monthly payment and pay the insurer from an escrow account. In that case, the premium is part of your mortgage payment, and mortgage servicers generally don’t take credit cards. If you pay your insurer directly, ask whether it accepts cards.

Renters insurance is paid directly to the insurer, so a card is usually an option.

Health insurance

If you get coverage through work, your share of the premium usually comes out of your paycheck before you see it. If you buy a plan yourself, through the Health Insurance Marketplace or your state’s marketplace, your insurer sets the payment options. Marketplace insurers are required to accept checks, money orders, bank transfers, and prepaid debit cards. Some also take credit cards.

Medicare premiums can be paid by credit or debit card through your Medicare account, with no fee from Medicare. This works for one-time payments only, however. Medicare Easy Pay, the automatic option, is deducted from a bank account.

Life insurance

Some life insurers accept a card for your first payment and then ask for automatic bank drafts after that. If you do pay by card, keep it current. If your card is reissued with a new number or expiration date, update it with your insurer. A declined payment can put your policy at risk of lapsing once the grace period runs out.

Disability insurance

Coverage through work is usually paid by payroll deduction. If you have an individual policy, check with your insurer.

Read more > How to Lower Your Car Insurance

Pros of paying insurance with a credit card

You might earn rewards

Cash back or points on your premium can help you reach a sign-up bonus. Compare the rewards to any fee your insurer charges first.

Your bills land in one place

Putting insurance and other recurring bills on one card puts them on one statement, which can make them easier to track.

It can give you a few extra weeks

If you paid your last statement in full, most cards give you a grace period. That means no interest on new purchases until the due date. Putting a premium on the card can give you time between when it’s due and when you need the cash.

Cons of paying insurance with a credit card

You might pay a fee

Credit card transactions usually come with a processing fee. Many online storefronts absorb that cost, but insurance companies might charge you a surcharge fee.

On a $200 monthly premium, a 3% fee is $6 a month, or $72 a year. That’s more than a card paying 1% or 2% back would earn on the same payment. If there’s a fee, you’ll usually come out ahead paying from your bank account.

Interest can cancel out any benefit

If you’re already carrying a balance, there’s usually no grace period. Interest on the premium starts right away. Credit card accounts that pay interest average 22.15%, according to the Federal Reserve.

It can increase your credit utilization

Credit utilization is how much of your available credit you’re using. A large premium, like a six-month auto policy paid up front, can push it up and lower your score while it’s on your statement. Once you pay the balance down, the effect goes away.

Bottom line

You can pay most car and renters insurance with a credit card, and some health and life policies too. Check for a fee first, because a fee usually outweighs the rewards.

One thing most people don’t know: insurers generally don’t report your on-time premiums to the credit bureaus, but in most states, auto and home insurers can use your credit to help set what you pay. A Kikoff Credit Account reports on-time payments to Equifax, Experian, and TransUnion, so each month adds to the record behind that price. There’s no credit check to sign up, and plans start at $5 a month.