Should you pay for your insurance with a credit card? [Boss Insurance]

When shopping for insurance, you’ve probably wondered if you could pay your premium with a credit card. The answer depends on the type of insurance you purchase. Although you can pay for car insurance policies with your credit card, for example, your life insurance company might refuse. And even if you can use your credit card, you need to consider whether it makes financial sense to do so.

Here’s what you need to know about buying and paying insurance premiums with a credit card.

Using a credit card is a common way of paying day-to-day expenses for many Americans. Not only can it help you earn rewards, like cash back or travel rewards, but credit cards also come with protections that debit cards don’t, making a card payment credit preferable to using a debit card in many scenarios.

Some of CNBC Select’s top picks for credit cards in 2023 include the Chase Sapphire Preferred® Card for its generous welcome bonus and strong travel rewards for travel and dining purchases. For those looking for cash back, the Citi® Double Cash Card offers 2% cash back on all eligible purchases, giving you 1% when you make a purchase and an additional 1% when you pay your bill. credit card.

However, you will want to ensure that your credit card is paid in full and on time – carrying a balance on your card may negate any benefits you may receive, as interest charges on credit cards may be expensive. If putting your insurance premium on your credit card requires you to carry a balance, it might be worth considering other options, such as a transfer directly from your bank account.

Many major insurers allow you to use a card for your car insurance premiums. Progressive, Geico, and State Farm allow all credit card payments and were also among our top picks for auto insurance this year, due to their savings options, availability, and coverage.

However, some auto insurers may charge a fee for using a credit card. It is worth making sure that there are no charges imposed by a credit card payment, as this could actually increase the amount you will pay for insurance coverage and could negate any benefits or advantage.

You probably can’t pay for life insurance with a credit card. You may be able to use a card for the initial payment of your premium, but afterward you will usually need to set up an electronic funds transfer (EFT) or write personal checks from your checking account.

With home insurance, the ability to use a credit card largely depends on your insurer and the status of your mortgage.

If you don’t have a mortgage and your home is paid off, it’s up to you and your insurer how you pay for your home insurance. As with car insurance, it may be worth checking that there are no fees required for using the credit card.

But if you have both a mortgage and an escrow account, you might be out of luck when trying to pay your premiums with a card. This is because the purpose of an escrow account is to pay important expenses (such as your property taxes and insurance premiums) from a bank account over time, which prevents the use of credit cards. credit.

Whether or not your mortgage lender requires you to have an escrow account depends on the type of mortgage you have, the amount of equity in your home, and the state you live in. For example, FHA loans and USDA loans require escrow accounts, so you won’t be able to pay on your own with a credit card with these loan types.

Paying for your auto insurance with a credit card can be a good idea. However, not all types of insurance can be paid for with a card. Check with your insurer to make sure there are no charges and make sure you’ll be able to pay your balance in full to get the most benefits you could get from using your card .

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