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Can I Pay for Car Insurance With a Credit Card?

pay car insurance with credit card


Can you pay for car insurance with your credit card? This is a common question, and the answer is usually yes. There are a number of reasons you might consider doing this.

For example: premium bills often come in lump sums for six months or a year, and this can put stress on your budget. Or perhaps you love getting air miles, and look for all possible opportunities to build up your account.

In the following article, we'll cover the following:

Can You Pay for Car Insurance With a Credit Card?
Which Carriers Accept These Payments?
The Pros and Cons of Paying by Credit

Let's get started…

Can You Pay for Car Insurance With a Credit Card?

In the past, the default method of paying your insurance was check, typically delivered by mail. However, in an increasingly electronic/plastic world, credit cards are being accepted by most major insurance companies to cover premiums.

Don't be confused by people telling you that premiums are the same as rent or loan payments, and not payable by plastic.

Which Carriers Accept These Payments?

Although most will, not all companies accept these payments. To be sure, check with your carrier.

We've compiled a reference list to get you started. Here are some insurance companies and payment options they accept.

  • Allstate - Paypal, Visa®, MasterCard®, Discover® or American Express®, check, or bank transfer.
  • State Farm - Checking/savings account transfer, credit/debit cards, check or money order.
  • Esurance - Checking/savings account, debit card, credit card, Paypal.
  • Progressive - Credit Card, Paypal, Online check, Personal check or money order, electronic funds transfer (ETF).
  • American Family - MasterCard, Visa, American Express and Discover, automated funds transfer, pay by phone, check or money order.
  • Geico - Online Check, Debit or credit card, ETF, Personal check or money order.
  • Amica - Visa, MasterCard, Discover and American Express, Autopay, mailed checks, fund transfer or money orders made out to Amica.

You'll also want to pay attention to the fine print attached to your carrier's payment options, some charge an additional fee for card processing (more on that below).

The Pros and Cons of Paying by Credit Card

Now that we know it's possible to pay by credit and have a list of some companies who accept these payments, we get to another important question. Should you pay this way?

Everyone has different financial considerations to make -- here the pros/cons of paying in this manner.

Pros:

  1. If you're someone who struggles to keep track of bills and due dates, paying your bill by card all at one time avoids the necessity of having to mail monthly checks. Paying with credit means you'll be far more likely to pay on time.

  2. If you have credit cards that offer cash back incentives or allow the user to build up travel rewards, then putting big ticket items (such as insurance) on them can be of great benefit. Whether this is worth it solely depends on the card and the reward program.

  3. Some insurance companies will reward you for paying your bill all at once by waiving a monthly fee. This can lower your overall insurance costs.

  4. If you find yourself a little cash poor or in some other financial pinch, paying your insurance bill by credit card can buy you some time to sort things out.

  5. Automatic payments can be set up to make sure you never miss a payment (although this can also be done with a bank account or debit card, which is probably better if you can afford it).

Of course, there are some drawbacks to using plastic as well. Here are the cons:

  1. If you build up a high balance from paying your car insurance and don't pay it off on time, you'll face significant interest from your bank and a ding on your credit score.

  2. Some cards/banks charge convenience fees to pay bills such as insurance premiums.

  3. If you are not financially disciplined, credit cards can get you into trouble with larger bills.

  4. Paying your insurance premiums can affect your credit utilization rate. In other words, the amount you use affects your overall credit score. Most experts agree that it should be kept under 30% [1].

Summary

While it is definitely possible to pay your insurance premiums with a credit card (in most cases) it isn't always necessarily smart. You should take stock of your financial situation and do what works for you. To review the key points:

  • More and more insurance companies are making it possible to pay annual or bi-annual car insurance premiums via credit card.

  • All major insurance should have sections of their websites dedicated to explaining payment options. Allstate, Geico, Progressive, Esurance, American Family, and State Farm all accept these payments.

  • “Should you?” is just as important a question as “can you?” There are many pros and cons with this type of credit card usage. You can simplify the payment process and build rewards by using plastic, but you can also incur extra fees and dig yourself into a financial hole if you're not careful.


Sources:

1 - Experian


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