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You can typically pay your auto insurance bills with a credit card—but should you? If you're considering paying this routine bill by credit card, here are some things to keep in mind to avoid derailing your budget and your credit score.
Auto Insurance Companies That Accept Credit Card Payments
The vast majority of big, recognized insurance companies allow for payments with a credit card. These include:
- Allstate
- Progressive
- Travelers
- Nationwide
- Metlife
- Farmers
- USAA
- State Farm
- GEICO
Even if your insurance company doesn't currently accept credit card payments, keep checking; your company may add the option at some point to stay competitive.
Should You Pay Your Car Insurance With a Credit Card?
Paying for your insurance using a credit card is a common choice for many policyholders. Considering other payment types and payment schedules, this method has both advantages and disadvantages.
Pros of Paying Car Insurance With a Credit Card
- On-time payments: If you pay with a credit card and set up autopay, you'll ensure you have no late payments. Late payments can lead to late fees, causing unnecessary expenses which could otherwise be avoided.
- Paying in full: Paying in full for your policy is much easier when using a credit card. Most insurance carriers offer a discount when you decide to pay annually, rather than splitting your premium into numerous smaller payments.
- Earn rewards: When you carry an insurance policy, the payments to ensure continuity of coverage have to be made one way or another. By paying with a rewards credit card, you could earn rewards, like travel miles, which accumulate over time.
Cons of Paying Car Insurance With a Credit Card
- Potential credit score damage: Your credit card balance compared to your credit limit is called your credit utilization ratio. A higher card balance can negatively impact your credit score, especially if your utilization tops 30%. If you charge your insurance payment, try to pay it as soon as possible to help reduce your utilization.
- Accumulating interest: Paying with credit cards can get tricky and needs to be treated responsibly. To avoid interest charges that add to your overall cost of insurance, pay off your bill each month.
- Potential for additional fees: Even though using a credit card is quick and convenient, it might come with some extra charges. Some insurance companies charge an extra fee for credit card payments, while others charge a service fee or interest for an installment payment in general.
How to Pay Car Insurance With a Credit Card
Paying for your insurance with a credit card is simple. The steps might differ a bit depending on the insurance company and their interface, but the steps should overall be similar.
- Log in to your account on your insurance company's website or access your mobile app if your insurance company has one.
- Locate the billing section.
- Find the payment you want to pay via credit card.
- You will be redirected to the payment page. The website will ask you for your credit card information, including your card number, CVV code, expiration date, cardholder's name and sometimes the billing address or ZIP code.
- After a successful payment, most carriers should give you an option to download a receipt or send it to the email associated with your account.
If you would like to set up recurring payments or change your existing payment method, the process is very similar: Find the "Update billing method" section in your billing and make the change. Credit card payments can also easily be made over the phone.
The Bottom Line
The best way of ensuring your credit card payments don't end up giving you a headache is by paying your balance off each month. This will help you maintain your credit score and avoid going into debt. You can also use on-time payments for things like rent, cellphone bills and streaming services to improve your credit score by signing up for Experian Boost®ø. This feature scans your bank and credit card statements for these payments, and you can see a score boost in just minutes.