Can You Pay Car Insurance With a Credit Card (and Should You)?

With credit cards offering so many perks, from cash back to purchase protection, you may want to consider making car insurance payments with one. While you can pay your car insurance premium with a credit card, we don't always suggest doing it because it could cost you extra in fees or damage your credit if you can't pay off your balance. We recommend looking into your insurer's policies for using credit to pay premiums and choosing cards with lower service fees.

We'll walk you through the advantages and disadvantages of paying for your car insurance with a credit card, which insurers accept credit cards, and how to set up your payments.

How to pay for car insurance with a credit card

If you decide you want to pay for your auto insurance with a credit card, your first step is to contact your insurance company. Start by asking if they'll let you pay for your insurance bill with a credit card. Then, ask if there are any fees for paying with a card.

Some insurance providers will let you pay your premiums with no credit card fee only if you pay your annual premium in full. It may be a good idea to pay the full annual premium anyway since many insurers will offer a discount for paying for the whole year upfront, sometimes up to 20%.

There are several payment options available for paying your premiums with a credit card:

• Online/mobile app: Many of the best car insurance companies let you make secure payments through an online portal or mobile app. You'll also be able to schedule automatic payments online if you want to pay your premiums in monthly installments.
• By phone: If you prefer to talk to a person rather than make payments online, you can call the insurance company's billing department and give them your credit card number over the phone.
• Pay in full: Paying your annual premium in full could help you save money on car insurance. It may also give you a little extra time to pay off your bill. Paying off your balance every month, or at least using a low-interest credit card, will help you avoid paying more in interest than you're saving.
• Monthly payments: If you can't afford to pay your whole annual premium on your card, you can autopay your monthly premium payments instead. 

Pros and cons of paying car insurance with a credit card

Here are reasons to consider putting car insurance payments on your car, plus possible disadvantages to keep in mind.

Pros

There are several advantages to paying for your car insurance with a credit card if you're confident that you'll be able to pay your bills on time:

• Earning rewards: Love to travel? Some of the best travel credit cards let you earn points for airfare, hotels, restaurants, and more with certain purchases — including car insurance. Points can often be redeemed for statement credits, gift cards, purchases, travel, and more.
• Discounts for paying in full: Using a credit card to pay for your car insurance could make it easier for you to pay the annual premium in full, which is often discounted from what you would pay monthly.
• Convenience: If you pay your car insurance bill in full, that's one less bill you have to worry about every month. Alternatively, you can eliminate the hassle of paying your monthly premiums by setting up automatic payments with your credit card.

Cons

If you're trying to stop living paycheck to paycheck or struggling with paying your bills on time, you may want to avoid using your credit card to pay your car insurance. Other drawbacks include:

• Extra fees: Some insurers may charge convenience or processing fees for credit card payments. These fees could be enough to negate any discounts you'd get from paying your insurance with a credit card.
• Interest rates: If you don't pay off your credit card balance every month, you could be charged interest. Although some credit cards offer 0% intro APRs, most have interest rates between 15% and 26% or more, depending on your credit profile.
• Higher credit card balance: Financial experts suggest keeping your credit utilization ratio, the amount of credit you use as a proportion of the total credit available to you, under 30%. Anything over 30% could negatively impact your credit score, potentially hurting your chances of getting a mortgage, buying a car, or even renting an apartment.

Auto insurance companies that accept credit cards

Most major insurance companies accept payments from credit cards — including Visa, Mastercard, and American Express — for auto insurance premiums.

Here are some of the top car insurance companies that accept credit cards. If yours isn't on this list, you can shop around and get a car insurance quote with the insurance rates and payment methods that fit your needs and budget.

• Progressive
• Allstate
• Farmers
• Geico
• Liberty Mutual
• Nationwide
• State Farm
• Travelers
• USAA
• Costco
• Auto-Owners

Is it better to pay for auto insurance with a credit or debit card?

A debit card differs from a credit card because it is directly linked to your bank account, and money comes directly from your checking balance.

On the other hand, when you pay with your credit card, transactions are charged against your line of credit, which you are responsible for paying at a later date. Paying your car insurance with a credit card could be beneficial since it gives you more time to pay your bill.

However, paying your car insurance with a credit card can also be a disadvantage if your credit card has a high interest rate or you're struggling to pay your bills on time. If that's the case, paying with a debit card may be a better option.

FAQs

Bottom line

Using a credit card to pay for your car insurance premiums can be a great way to earn rewards that your credit card offers, such as travel points and cash back on purchases.

However, paying your car insurance with a credit card should only be an option if you can pay off your monthly credit card bill in full on time. This will keep your credit in good shape and not cost you more in the long run.

If you want to earn rewards points for using your credit card to pay for car insurance and other bills you pay on a regular basis, check out some of the best rewards credit cards available.