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Insurance

Should you pay for your insurance with a credit card? Here's what you need to know

You can use a card to pay some of your insurance premiums, but watch out for fees.

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Emirmemedovski | E+ | Getty Images

When shopping for insurance, you’ve probably wondered if you can pay your premium with a credit card. The answer depends on the type of insurance you’re buying. While you may be able to pay for auto 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 for insurance premiums with a credit card. 

Why would I want to pay my insurance with a credit card?

Using a credit card is a common way to pay for everyday 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 have, making a credit card payment 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 purchases on travel and dining. For those seeking cash back rewards, the Citi Double Cash® Card offers 2% cash back on eligible purchases — giving you 1% when you make a purchase and another 1% when you pay your credit card bill (see rates and fees). 

Chase Sapphire Preferred® Card

On Chase's secure site
  • Rewards

    Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.

  • Welcome bonus

    Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠.

  • Annual fee

    $95

  • Intro APR

    None

  • Regular APR

    21.49% - 28.49% variable on purchases and balance transfers

  • Balance transfer fee

    Either $5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

  • Terms apply.

 

However, you’ll want to make sure that your credit card is paid in full and on time — carrying a balance on your card might negate any of the perks you could receive since credit card interest charges can be expensive. If putting your insurance premium on your credit card would cause you to carry a balance, it might be worth looking into other options, like a transfer directly from your bank account

Can I pay for auto insurance with a credit card? 

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

Progressive Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Progressive offers a number of lines of insurance to allow for bundling, and convenient tools to help you keep your coverage in your budget.

  • Terms apply.

Geico Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Geico coverage and services are available in all 50 states and the District of Columbia and there are 16 different types of discounts available. In addition to the standard coverage options, Geico offers various optional add-ons, such as emergency roadside assistance, rental car reimbursement and mechanical breakdown insurance.

  • Terms apply.

However, some car insurers may charge a fee for using a credit card. It’s worth making sure that there aren’t any fees imposed by a credit card payment, as this could actually add to the amount you’ll pay for insurance coverage and might negate any benefits or perks. 

Can I pay for life insurance with a credit card? 

It’s likely that you won’t be able to pay for life insurance with a credit card. You may be able to use a card for your initial premium payment, but afterward, you’ll generally need to set up an electronic funds transfer (EFT) or write personal checks from your checking account

Can I pay for homeowners insurance with a credit card? 

With homeowners insurance, whether you can 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 your insurer and you as to how you pay your homeowners insurance. As with auto insurance, it might be worth checking to make sure that there aren’t any fees required for credit card usage. 

But if you have both a mortgage and an escrow account, you may be out of luck when you try to pay your premiums with a card. That's because the purpose of an escrow account is to pay for large expenses (such as your property taxes and insurance premiums) from a bank account over time, and this precludes the use of credit cards.

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. 

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Bottom line

Paying for your auto insurance with a credit card may make sense. However, not every insurance type can be paid with a card. Check with your insurer to make sure there aren't any fees and make sure you'll be able to pay your balance in full to make the most of any benefits you could get from using your card.

Catch up on CNBC Select's in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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