In the various forums, groups, blogs, and articles out there revolving around the world of points and miles, Plastiq is often mentioned as one of the tools that can allow an individual to pay a bill with a credit card. In this post, I’m going to go over the basics of Plastiq, some considerations, and some additional tips on earning extra points through using this service.
What is Plastiq?
Plastiq is a company founded by two college students who in their words “believed that making a payment as important as tuition should be as simple as buying a coffee.” The website launched in 2015 and since then millions of users have been making monthly payments covering everything from rent, utilities, mortgages, and phone bills to paying for a variety of additional services like contracting and landscaping, as well as the purchasing of goods.
This is done through simply creating an account with Plastiq and entering various credit cards and the billing information of institutions that need to be paid. Bills can be scheduled in advance or paid immediately. The overall process is quite simple and while Plastiq often offers promotional deals, the standard fee applied is 2.5%. Plastiq will charge your credit card and then cut a check (or send an ACH payment) on your behalf.
Why use Plastiq?
For anyone that is hooked into the points game there is this pain felt anytime something is paid for and points are not earned. One of the most common areas for this (and most individuals’ single largest monthly expenditure) is the home mortgage. By being able to pay these kinds of bills with a credit card, no longer are these valuable points being left on the table.
What limitations exist?
- Payments to friends/family (note that payments for legitimate services from a business run by a friend/family member are fine)
- Deposits into retirement accounts or other savings plans
- Payments to be sent outside of the US or Canada
- Credit card statements
Another item to note is that on occasion Plastiq will require verification of a legitimate recipient. This issue came up for me when I entered the name of an individual for payment. This individual has a construction business that is just his name and he had done work on my roof. I received an e-mail from Plastiq asking for an invoice and I provided the invoice and resolved the issue in under 24 hours. I have had tenants pay me via Plastiq and they provided a copy of a lease and they too had the issue resolved in under 24 hours.
Plastiq allows Visa, Mastercard, American Express, and Discover to be used on the site, but while Mastercard and Discover can be used for any type of payment, Visa and American Express have the following restrictions:
Visa: can be used for any payee with the sole exception of mortgages
American Express: can be used on the following payee types (from Plastiq’s website) – “Government, Utilities, Education, Residential Rent and Club Fees and Memberships”
Fees and Spend Coding
The overall fee is 2.5% for credit cards and 1% for debit cards. While I wouldn’t recommend using a debit card on Plastiq, do note that the fee is lower. Visa, Mastercard, and Amex gift cards CAN be used to pay bills and are treated as credit cards and charged the 2.5% fee. Occasionally Plastiq offers discounts for specific card types or bill types or for scheduling payments in advance. Taking advantage of these promotions can add up to a decent amount of savings.
A lot of people ask how these payments code on credit cards (are there category bonus opportunities) and currently I see the payments coding on my cards as “Utilities.” Up until earlier this month the Citi AT&T Access More was coding as 3x, but that seems to have fallen off. At this point, it COULD be reinstated, but I’d personally bet against that.
Plastiq also offers a referral bonus program where users can refer others and earn $1,000 fee-free dollars for themselves and $500 fee-free dollars for the new user.
Folks that are newer to the points and miles game might look at a 2.5% fee and view that as a losing proposition up against a card only earning 1 or 2x on the transaction. Like most things in this world, “it depends.” If you are using a straight cash back card, then yes, you are absolutely losing money. In this instance, avoid using Plastiq.
However, for cards that earn airline or transferable points, even a 1x earn rate can be lucrative if you are able to redeem those points for greater than $0.025 each. Many premium cabin redemptions using Ultimate Rewards, Membership Rewards, SPG, or Thank You points can easily top $0.10 per point. Another consideration is using Plastiq to hit the spend necessary to trigger the sign-up bonus. This is a great way to knock out an extra thousand dollars that would otherwise be inaccessible to hitting the credit card.
Lastly, my favorite way to utilize Plastiq is to pay bills by liquidating gift cards. I purchase gift cards using my Chase Ink Plus and Chase Ink Cash at office supply stores in order to earn 5x points and thus am effectively earning 5x on the payment of a mortgage.
Hypothetical Annual Earning
Looking at monthly expenses that can’t typically be paid by credit card, we can get a sense of the value that Plastiq can add.
This comes to a monthly total of $2,150, which on an annual basis can give you the following based on these respective earn rates:
1x : 25,800
2x : 51,600
3x : 77,400
5x : 129,000
At 2.5% in fees on $2,150 per month, the annual total in fees is $645. The ability to purchase 5x gift cards at break-even or even negative cost can greatly bulk up that earning power and with close to 130K in points just from paying bills is enough for a first class ticket anywhere in the world.
Plastiq is a great option to pay bills on a wide range of services and also offers a very reasonable fee for the service. This can allow for a boost to the monthly points accrual, creating significant value provided solid redemptions are made. One thing to remember is that while Plastiq does offer reasonable fees, there are some specialized payment services that do beat them. For example, I had been paying my power bill via Plastiq until I realized that my power company charges a flat $1.65 to pay direct on their website (up to $1000 per payment). As always, do your homework and know that Plastiq is a great additional tool to have in your points earning arsenal.
In the interest of full disclosure, we will earn a referral bonus for anyone that is approved from the link above. These are publicly available offers and all claims made in this post as of the posting date can be found in the offer language for the card. We only provide the best publicly available offers and thank you for your continued support.
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