Credit cards offer incentives if you use them as your primary form of payment. Some give you cash back on purchases, while others provide travel points for certain purchases you make with your card.
With those types of perks, you may want to consider making car insurance payments with a credit card. While you can pay your car insurance premium with a credit card, it could cost you more in fees or damage your credit if you can’t pay off your credit card bill by the due date each month.
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.
There are several payment options available for paying your premiums with a credit card:
- Online: Many of the best car insurance companies let you make secure payments through an online portal. You’ll also be able to schedule automatic payments online if you want to pay your car insurance 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.
- Mobile app: Most insurers now offer mobile apps that let you pay your bill, set up automatic payments, and access your digital insurance card when you need it.
- 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 by making an annual insurance payment.
- Monthly payments: If you can’t afford to pay off your annual car insurance premium on your credit card, you can autopay your monthly premium payments instead. Just make sure your insurance company doesn’t charge any fees for credit card payments.
Which car insurance companies accept credit cards?
Most major insurance companies accept credit cards — including Visa, Mastercard, and American Express — as payment for your premiums. Paying the total car insurance premium for the year could save you up to 20% since many insurers discount annual premium payments.
Here are some of the top car insurance companies that accept credit card payments. 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.
WarningRemember to check with the insurer to see if they charge any processing or convenience fees for paying with a credit card. These fees can range between 1.5% and 3.5%.
Advantages of paying car insurance with a credit card
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. Some cards also let you redeem points for Amazon purchases or cash back.
- 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 annual car insurance premium 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.
- Pay bills on time: Automating payments from your credit card can also ensure that your car insurance premiums get paid on time every month.
Disadvantages of paying car insurance with a credit card
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 bill every month, you could be charged interest on the balance. Although some credit card companies offer 0% interest for a limited period, most cards have interest rates between 15% and 26%.
- Higher credit card balance: Some financial experts suggest keeping your credit utilization under 30% of your limit to avoid increasing your credit card debt. Anything over 30% could also hurt your chances of getting a mortgage, buying a car, or even renting an apartment.
- Negative impact on credit score: Using more than 30% of your total credit limit could impact your credit score. Your credit score could also drop if you miss making payments on your credit card.
Paying with a credit card vs. a debit card
A debit card differs from a credit card because it is directly linked to your bank account. When you use your debit card to pay for something, the money for the transaction comes directly out of your bank account.
On the other hand, when you pay with your credit card, the amount of the transaction is 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.
Can you pay a deductible with a credit card?
If your auto repair shop accepts credit card payments, you can pay the deductible portion of covered car repairs with a credit card.
In some cases, you may have to pay the deductible directly to your insurance company. If your insurer takes credit card payments for your premiums, they may accept a credit card payment for a deductible as well.
Can you use a credit card to pay for rental car insurance?
If you use your credit card to rent a car, you may not necessarily need to purchase additional rental car insurance. Many credit cards provide some insurance coverage for rental cars.
If your rental car gets damaged, vandalized, or stolen, your credit card may offer a collision damage waiver (CDW) to cover the costs. Keep in mind that credit cards don’t provide liability insurance for rental cars.
The coverage limits on credit card rental car insurance policies can vary. If you want more coverage, pay for your rental car with one of the best credit cards for rental car insurance, which offer primary coverage when you need to file a claim rather than secondary coverage.
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.
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