Q

Q

Should I pay my car insurance with a credit card?

A

A

Most major car insurance companies will accept credit cards as a form of payment. Paying with a credit card can earn you reward points and give you more time to make payments, but it can also translate to extra fees and debt.

Anna Swartz 1600Kara McGinley

Anna Swartz & Kara McGinley

Published March 11, 2020

KEY TAKEAWAYS

  • Most car insurance providers accept credit cards as a form of payment. You should double check with your insurer to see if any additional fees apply

  • Depending on your credit card company, you can earn reward points for using your card

  • However, you should make sure you are making your credit card payments in full every month so you can avoid paying interest on your premiums

  • If you rent a car but do not have your own car insurance, your credit card company may actually offer a certain amount of car insurance coverage on the rental

Most insurance companies will accept credit cards and debit cards as forms of payment. However, before deciding to put your car insurance premiums on your credit card, you need to determine if this is the best option for your budget.

Paying some of your monthly bills with a credit card has its benefits: It can be a good way to earn extra rewards points, depending on your card, and it can give you more time to make your payments.

But putting your bills and other monthly payments on a credit card can also be risky — sometimes using a credit card can mean extra fees or charges, and putting too many different payments on your credit card can lead to credit card debt if you aren’t able to fully pay off your balance each month.

Paying for car insurance with a credit card, like paying any bill with a credit card, has its pros and cons, and different car insurance companies may have different rules about putting your payments on a card. That said, most major insurance companies make it possible to do so. Here’s what you need to know if you’re considering putting your car insurance payments on a credit card.

In this article:

How to pay your car insurance with a credit card

Most major car insurance companies will give you the option of paying your car insurance premium with a credit card, and many give you the choice of making your payments through various channels:

  • Online through your insurer’s website
  • Over the phone
  • Through a mobile app (depending on your insurance company)

But before you go ahead and put your monthly payment on your credit card, check to see whether your car insurance company charges you any additional fees for paying on a card.

Some car insurance companies will charge a fee if you use a card for monthly payments, but will waive any fees if you use your credit card to pay your annual premium in full. Paying your annual car insurance payment up front can also earn you other discounts, so if you can afford to do it, it can be a smart choice.

But it’s important to remember that putting your car insurance payments on your credit card doesn’t mean you’ve delayed paying your premiums indefinitely. It’s crucial to make your credit card payments in full every month, otherwise you risk having to pay interest. And credit card interest is vastly higher than interest on any other kind of loan, it can be more than 20%, meaning you’ll lose a ton of money, and may risk going into debt, if you put your insurance payments on your credit card and then can’t afford to pay your credit card bills.

That said, if you stay on top of your finances and make sure to pay off your credit card balance in full and on time, then putting your car insurance payments on your credit card may make sense for you.

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Why you should pay your car insurance with a credit card

There are a number of reasons you may want to put your car insurance payments on a credit card. Those benefits include:

  • Earning rewards points. This is one of the biggest pros to paying your car insurance payments with a credit card. As long as you pay your balance on time, you’ll earn credit card points on money you would have spent regardless, and later you’ll be able to put those rewards points towards travel or other expenses.

  • Convenience. Paying your car insurance payments and other bills with your credit card can help keep all your payments in one place. And if you set up automatic payments, you never risk being late with a car insurance payment.

  • More time to make your car insurance payment. As long as you pay your credit card balance in full and on time, putting your car insurance payments on a credit card is a good way to give yourself a little extra time to pay.

Why you should not pay your car insurance with a credit card

There are a few simple risks to look out for if you’re considering putting your car insurance payment on a credit card. Those possible negatives include:

  • Extra fees. As we mentioned above, your car insurance provider may charge a fee for paying with a credit or debit card. Even if the fee is just a few dollars, that can add up to a significant amount over months or even years, so consider if the convenience is worth any additional fees.

  • Paying interest. If you put your car insurance payment on a credit card and then can’t afford to pay your credit card bill in full, you risk having to pay interest on the bill. And, as we mentioned earlier, credit card interest can be very high, meaning you risk paying much more for the payment then you originally owed.

  • Harm to your credit score. Your credit score includes a factor called your credit utilization ratio. That’s just how much of your total credit limit you use, but if you regularly max out your card, or spend close to your credit limit, it can negatively affect your credit score.

Credit cards and rental cars

If you’re renting a car and already have an auto insurance policy, that coverage will most likely extend to your rental car. However if you don’t already have an insurance policy and you might not need to buy rental car insurance — your credit card company might actually cover you.

Some credit card companies offer collision damage waiver coverage, but not liability coverage.

If you charge the cost of your rental car to your credit card you should be able to access coverage through your credit card company. That means if you get into a covered accident or your rental car is stolen, then your credit card company will reimburse you up to a certain limit.

You should contact your credit card company to make sure they offer rental car coverage. Some credit cards that come with rental car insurance include:

  • Chase Sapphire Preferred and Chase Sapphire Reserve cards
  • Chase Hyatt and Chase World of Hyatt cards
  • Chase United Explorer and United MileagePlus cards
  • Chase Amazon Rewards Visa Signature cards
  • American Express Green, American Express Gold, and American Express Platinum cards
  • American Express Hilton Honors and Starwood Preferred Guest cards
  • American Express Delta SkyMiles cards
  • Mastercard
  • Capital One Visa Platinum card
Insurance Expert

Anna Swartz

Insurance Expert

Anna Swartz is a Managing Editor at Policygenius in New York City, and an expert in auto insurance. Previously, she was a senior staff writer at Mic, writing about news and culture. Her work has appeared in The Dodo, AOL, HuffPost, Salon and Heeb.

Insurance Editor

Kara McGinley

Insurance Editor

Kara McGinley is an Insurance Editor at Policygenius. She previously worked as a freelance writer and a copywriter for various startups. Her work can be found in Teen Vogue, The Culture Crush, Mask Magazine, and more.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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