Published on March 14th, 2018 | by Chuck152
Plastiq Review: Use a Credit Card to Pay your Mortgage, Rent, or Any Other Bill
When we first wrote about Plastiq a couple years ago, it was a brand new service and nothing was known about how they operate. A lot has been clarified and a lot has changed, and I thought it’s worth writing a full review on the service. We’ll keep this page updated with any future changes as well. Please let us know if there’s anything we should add or if you see anything that needs updating.
Plastiq is a bill payment service which allows us to pay any bill with a credit or debit card for a 2.5% processing fee.
It’s long been possible to pay select bills with a credit card for a fee using various services; for example, here’s a Complete List Of Options For Paying Your Rent With A Debit Or Credit Card. The novelty of Plastiq is that it’s possible to pay any bill with a credit card; rent, mortgage, taxes, tuition, loans (car, student, home equity, etc.), utilities, or anything else.
Even small businesses can be paid via Plastiq. Think: your contractor, caterer, gardener, accountant, lawyer, or therapist. Plastiq will mail out a check to the selected address. Note that Plastiq may, in some cases, require verification with an invoice from the payee.
- You can not pay a friend with Plastiq, but you can pay any business who provides goods or services.
- You can not pay a credit card bill, but you can pay other kinds of loans.
- You can not pay any kind of retirement or savings plan accounts.
- You can not send a payment outside the USA/Canada.
Things to Know
- For the curious: here’s what the check will look like.
- Plastiq does not send out any sort of 1099’s or any other tax form. Some recipients might get nervous, but it’s really just a standard check, no different than had you sent the check yourself.
- You can schedule out payments into the future. For example, you can set up a monthly recurring payment of your rent, mortgage, or loan payment.
- When sending a payment, there’ll be a space to put your account number or any other applicable information in the Memo field.
- Some recipients will be sent a physical check while others are paid via ACH. Any recipient you add yourself (i.e. it wasn’t previously in the system, like your caterer or a bank they didn’t have in the system) will be sent via mailed check. Recipients already showing in the system are sometimes paid via ACH and sometimes via check. Federal tax payments are paid via check.
- Check payments take around 2 weeks to get to the recipient while ACH payments take around one week.
- Check payments have a 30-day expiration date. That seems unreasonably short to me, but our Plastiq contact does assures me that checks can go through beyond the 30-day timeframe; the timeframe is there only to encourage recipients to deposit it right away.
Plastiq allows Visa, Mastercard, Amex, and Discover. You can even use Amex, Visa, or Mastercard gift cards to pay; just use your address as the billing address, and they won’t put any $1 hold on the card when processing the payment.
- Mastercard and Discover can be used for all payees, including mortgage payments.
- Visa can be used for virtually all payees, with the sole exception of mortgages; everything else should work.
- Amex can be used on for the following payees: “Government, Utilities, Education, Residential Rent and Club Fees and Memberships.” So you can’t use an Amex for mortgage payments, car or loan payments, vendor payments for your business, your gardener, contractor, or commercial real estate rent. Easiest way to know if it works is to simply input your payee in the system and see if it limits you from using Amex.
There’s a newer development causing some Visa personal cards not to be allowed on Plastiq. The following Visa cards cards still work as before: Visa business cards, Visa gift cards, Visa cards issued by Capital One, and Visa cards issued by Chase are find as well (though Chase cards have a limitation whereby you can only charge up to 20% of your credit line).
Mastercard, Amex, and Discover all work as before.
Plastiq charges a flat 2.5% processing fee for credit card payments (e.g. a $1,000 payment will cost $1,025 including the fee). Plastiq often runs promotions offering lower fees with certain conditions. Check this link to see if there are any current offers.
Debit cards cost just 1%, but prepaid/gift cards do not count as debit cards – they pay the full 2.5% fee.
Most cards get us somewhere in the 1-3% return from their standard rewards, and this can largely offset the 2.5% fee. There isn’t necessarily any gain there, but where Plastiq really shines is for meeting spend requirements; those large bonuses make it easily worth the 2.5% fee. For example, if you have a minimum spend offer to get 50,000 bonus miles after spending $2,000, it’ll cost you $50 in fees to send $2,000 through Plastiq. Buying 50,000 miles for $50 is usually a bargain!
Other than meeting spend requirements or draining down your prepaid gift cards, there’s another angle to consider which is the potential category bonus. Category codings change constantly, and there have been various angles over the years in this regard.
Last we’ve heard, Plastiq has recently been earning 3x with CIP on all payments. This has gone back and forth, and can easily change at any time, but has been consistently working of late. AT&T used to work for 3x on some payments, but as of March 2018 something seems to have changed and it’s not working any longer.
There isn’t usually a cash advance problem with Plastiq; most transactions will show as ordinary purchases, and they’ll earn points and count toward spend requirements.
Since June 2018, an issue cropped up whereby some VISA cards are treated as a cash advance, at least initially. ALL MASTERCARDS, AMEX CARDS, AND DISCOVER CARDS ARE FINE.
Many Visa cards are fine as well including: all Visa business cards from any issuer, all Capital One Visa cards, Alliant Visa cards, Wells Fargo Visa cards, all debit cards, and all corporate or prepaid cards. Chase cards go through fine and earn rewards, however, they initially track as a cash advance until it reverts to a normal purchase. Thus, you can only send payments with Chase Visa cards in the amount of your cash advance limit (typically 20% of your credit limit), if you try doing more than that the system will block you. Again, it’s totally fine to use a Chase card and you will earn rewards on the purchase, but you are just limited in the amount you can send by your cash advance limit.
Please check out this thorough list from Plastiq to learn about whether this cash advance issue will affect any given Visa card – it goes through each card, one by one, and explains whether it is or isn’t affected.
Plastiq has a referral program which offers ‘Fee Free Dollars’, meaning they’ll process some of your payments free if you refer a friend. The new member also gets a bonus.
- Referring member gets $1,000 in free processing
- New member gets $500 in free processing
You’re saving the 2.5% fee, so essentially the referrer is getting a $25 bonus and the new member is getting a $12.50 bonus.
Important: To be eligible for the bonus, the new member must first make $500 in payments. This means that the first $500 in payments will not be free. After paying for their first payment, the $500 bonus will hit their account and they’ll be able to make another $500 payment fee-free. At that time, as well, the $1,000 bonus will hit the referrer’s account.
Plastiq seems to be the best option available currently for using credit card, since:
- the broad ability to pay so many kinds of bills
- the 2.5% fee is reasonable
The exception would be paying taxes which can be done for less than 2.5%. For most other bills, this is the easiest and cheapest way of paying with a card. For a lot of people, using Plastiq won’t be worthwhile for ordinary spend, but this can certainly be a great way of meeting spend thresholds or racking up specific miles needed.
Be sure to pay any bill well in advance of the due date, and check that the payment cleared in time. Things could always happen; for example, a payment might get held up for verification. I’ve had good experiences with Plastiq, but it’s never worth relying on completely on a service, always verify and have a backup plan.