Can You Pay Your Car Insurance Premium with a Credit Card?
You can usually pay your car insurance premium with a credit card, but it might not always be the wisest decision. Here’s why.
Written by Macy Fouse
Reviewed by Jessa Claeys
The majority of car insurance providers accept credit card payments to cover the cost of your premium, but it’s essential to make sure you can pay your credit card bill on time each month for this to be beneficial.
Credit cards make paying for everything way more convenient—a little too convenient, perhaps. Just swipe your card or enter your card number, and you’ll be on your way in a split second. However, paying for bills like
car insurance
with your credit card isn’t always so straightforward. Sure, you can earn a few perks by paying for your car insurance with a credit card, but it’s also a lot easier to get into debt. Confused? That’s why we’re here to walk you through the benefits and drawbacks of paying your premium with a credit card—plus how to make payments if you decide against it! Keep scrolling for the whole scoop.
Can you pay for auto insurance with a credit card?
In most cases, yes. But should you? It depends. Let’s go over the basics.
Most car insurance companies will allow you to make payments with a credit card, but the rules may differ between providers. Call and speak with an agent to get the details. While you have them, ask about their grace period for late payments, as well.
If using a credit card is the only way you’ll be able to pay your car insurance premium, then by all means—use it! It’s much better to add that to your credit card bill than risk driving without car insurance.
After all, being without it could mean paying penalties for
lapsed insurance coverage
or even breaking the law if car insurance is required in your state
.You’ll want to consider quite a few other factors, too. Let’s go over the pros and cons of paying for your insurance coverage with a credit card.
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Pros of paying by credit card
If you’re pretty responsible when it comes to managing your credit cards, making your insurance payment with one could be a wise decision for quite a few reasons.
Discounts
Using a credit card to pay your insurance premium could enable you to make your payment in a lump sum—and this could qualify you for your insurer’s paid-in-full discount. Of course, this discount offer will depend on your specific company, but most insurance companies give customers a decent discount if they pay their entire premium up front.
Some companies actually charge you a fee for paying your premium with a credit or debit card, but covering your bill up front may waive these fees. Paying in full may also help you avoid any monthly fees and late payments—which could go a long way in saving you even more money on car insurance.
Convenience
Paying for your car insurance with a credit card unlocks the option for automatic payment, or
autopay
. Setting up autopay means you don’t have to send in a check, log into your online account, or risk missing a payment every month because a credit card charge gets processed almost instantly. This will also buy you some time so you can pay on the exact due date rather than having to plan ahead. Just make sure you always take care of your credit card balance on time, too!
Points
Probably the biggest reason you’d want to pay for your insurance with a credit card is to get those sweet credit card points. You’ll have to spend that money one way or another, so why not take advantage of your credit card’s perks?
Whether you’re earning reward points, travel miles, or cash back, putting payments on your credit card is a great way to rack up those bonuses.
Cons of paying by credit card
When it comes to paying your insurance bill with a credit card, it’s not all sunshine and bonus points, though. There are a few risks and downsides to take into account before you enter your card number.
Paying by credit card requires a significant amount of discipline to make sure you stay out of credit card debt. Credit card bills can quickly get out of control, so if you know on-time payments are a struggle for you, you might want to stick with another payment option.
That being said, possible debt isn’t the only shortcoming of paying your car insurance with your credit card. Here are a few additional risks to consider.
Fees
Before deciding to make your payments via credit, make sure to check out your credit card company’s fine print. Some companies charge you extra convenience fees when using your card to pay bills. And sometimes your car insurance provider may even charge a fee for paying with any type of card, including debit!
These fees could add up, so be sure to weigh the benefits versus the costs of this convenient payment method.
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Putting any bill or monthly payments on your credit card can be a risk due to extra fees, but the biggest risk to accruing debt? Those pesky interest rates.
Credit cards have notoriously high interest rates, reaching up to 20% in some cases. If you make your car insurance payment with your credit card, be certain you can pay off your credit card bill in full each month. Otherwise, interest will accumulate, snowballing into bigger balances due than you bargained for.
Credit score
Your credit card usage doesn’t happen in a vacuum, unfortunately; all of your card usage directly affects your credit score. If you pay your auto insurance with a debit card, missing a payment puts your coverage in jeopardy—but missing a payment if you pay with a credit card could lead to trouble with your credit score.
Your credit utilization ratio—or how much of your total credit limit you make use of each month—plays a huge role in your credit score. For the most part, it’s best to keep your card utilization under 30%. Spending more or less than that could negatively impact your credit score.
When deciding whether you should pay your car insurance with your credit card, make sure you calculate how much your payment will figure into your credit utilization. If you’re already spending close to your limit each month, this may not be a good move for you.
What car insurance companies allow you to pay by credit card?
Almost all major insurance companies allow customers to pay their car insurance premiums with a credit card. Major cards like Visa, Mastercard, Discover, and American Express are often accepted. Here are the providers that are certain to accept your credit card payment:
If your provider isn’t here, that doesn’t mean they don’t accept credit cards! Check with your specific company to find out your payment options.
Other methods of paying for car insurance premiums
If you’d rather play it safe and not pay your car insurance bill with a credit card, you aren’t out of options. Most car insurance companies provide a wide variety of payment methods, which could include the following:
- Debit card
- PayPal/Apple Pay
- Electronic funds transfer (EFT)
- Online checks
- Text message payments
- Phone payments
- Mobile app
- Mail a physical check or money order
MORE: What is an EFT discount?
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Is it a good idea to pay insurance premiums with a credit card?
It depends on how financially responsible you are. If you’re able to pay your entire credit card bill on time each month, paying your car insurance with it is a good way to earn rewards or discounts. If you miss a payment on your credit card, however, you could end up paying much more than the original premium amount.
What is the difference between paying for car insurance with a credit card vs. debit card?
Both are electronic methods that pay your insurance bill automatically, but they’re very different. Debit cards remove money directly from your checking or savings account, just like a check. Paying with a credit card means the issuing bank—like Chase or Capital One—pays the bill, and you pay them back with your credit card payment. Missing a credit card payment will accrue interest and fees, leading to a higher bill to pay later.
Can I pay my car insurance deductible with a credit card?
In most cases, yes. Many insurance companies issue a check to pay the mechanic for repairs, not including your deductible. That means you’ll either pay your deductible directly to the insurance company—which they’ll process just like a monthly payment—or you’ll pay the mechanic directly. As long as the repair shop accepts cards, you can pay your deductible with a credit card.
