Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Nov 29, 2021

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Just What's Essential

  • If you can afford your credit card payments, then it is not bad to pay for car insurance with a credit card
  • Some insurance companies charge a processing fee if you use a credit card for your monthly bill
  • If you regularly max out your credit card, it could hurt your credit score, and in some states, that also affects your car insurance costs

Some drivers may wonder, is it bad to pay for car insurance with a credit card? As long as you can afford your credit card bill each month, it’s typically fine to pay for your insurance policy with a credit card.

Keep reading to learn how to maintain affordable car insurance with a credit card by avoiding maxing out your monthly limit, paying your bill on time, and understanding what processing fees your insurance company may charge.

After learning how to pay for car insurance with a credit card, remember to enter your ZIP code into our free comparison tool above to receive quotes from the top companies near you.

Is it bad to pay for car insurance with a credit card?

Can you pay for car insurance with a credit card? These days, most national insurance companies accept both credit card and debit card payments.

So if you find yourself asking, can I pay AAA car insurance with a credit card, or GEICO, or Allstate? The answer is, fortunately, yes.

If you decide to pay for your car insurance rates with a credit card, make sure you consistently pay your credit card bill on time. Otherwise, you may face possible fees on top of your interest rates.

Can you pay a car insurance deductible with a credit card? Yes, you can also typically make deductible payments with a credit card.

Experts recommend looking into the U.S. Bank Cash+ Visa Signature Card, Citi Double Cash Card, Chase Freedom Unlimited Card, or the Capital One Venture Rewards Card for monthly bills and utilities.

Ultimately, you should compare the interest rates, benefits, and reward programs to determine which one is the best credit card to pay an insurance bill for you.

Can you pay for car insurance with a prepaid card? You typically can use a prepaid card, but not all companies accept money orders.

When in doubt, ask your insurance representative for more details about what forms of payment are accepted.

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Why should you pay car insurance with a credit card?

There are a few advantages to paying your car insurance company with a credit card.

First, when you use a credit card to pay your car bill, the payment automatically goes through. You don’t need to wait for it to go through the mail system, plus it doesn’t take days to process.

Similarly, using a credit card is convenient. You can often set up automatic payments for all of your bills through a credit card.

Some insurance companies even reward you with an automatic payments car insurance discount.

See what companies offer discounts for customers that set up automatic payments in the table below, sometimes called a paperless billing discount.

Automatic Payments Car Insurance Discount Available by Company
CompaniesAutomatic Payments Car Insurance Discount Offered
21st CenturyYes - 3%
AAANo
AllstateYes
American FamilyYes
AmeripriseNo
AmicaYes
Country FinancialNo
EsuranceYes
FarmersYes
GEICONo
Liberty MutualYes
MetLifeYes
NationwideYes
ProgressiveYes
Safe AutoYes
SafecoYes
State FarmYes
The GeneralYes
The HanoverYes
The HartfordYes
TravelersYes - 2-3%
USAAYes

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Finally, you can earn reward points if you use your credit card for car insurance payments, assuming you always pay your credit card bill on time.

So the best credit card to pay car insurance with should offer you reward points or other bonuses.

Will your credit card provide rental car insurance? It’s possible. Some credit cards do offer rental car coverage as a customer incentive.

Since you’d spend money on your car insurance bills no matter what, using your credit card is an easy way to maximize your reward point earnings.

Why shouldn’t you pay for car insurance with a credit card?

Unfortunately, there are also potential disadvantages to paying for car insurance with a credit card. Most notably, it’s possible to fall into debt if you rely too heavily on credit cards.

To prevent debt, set up a realistic monthly budget and stick to it. Always pay your credit card bill on time.

If you’re already in debt, consider paying off old bills first before taking out any new credit.

Your credit score could also be in jeopardy. Credit cards use a credit utilization ratio to determine how much of your total credit limit is used in a given month.

If you spend close to that limit each month or max out your card, it negatively impacts your credit score.

Some experts suggest maintaining a utilization ratio of 30%. So if you pay for car insurance each month with your credit card, ensure it doesn’t put you over that limit.

Does credit affect car insurance rates?

Depending on where you live, your credit score may affect your car insurance rates.

According to the National Association of Insurance Commissioners (NAIC), in most states, insurance companies use your credit-based insurance score, slightly different from credit scores, when underwriting your policy.

Essentially, poorer credit suggests you’re at a higher risk to insure, which means your car insurance rates likely cost more.

Because of the Fair and Accurate Credit Transaction Act of 2003 (FACT Act), you have the right to obtain a free credit report once every 12 months from each of the three national consumer credit reporting agencies:

  • Equifax
  • Experian
  • TransUnion

But, currently, in California, Hawaii, Massachusetts, Michigan, and New Jersey, it’s illegal to use credit scores as a contributing factor for car insurance rates.

Using your credit card to pay for car insurance also incurs interest if you cannot make your payments on time.

Credit card interest rates are often high, so if you don’t pay off the bill in full, it’s like paying a higher rate for car insurance through the added interest.

Finally, some insurance companies charge fees if you pay for your insurance with a credit or debit card. Usually, the price is small, costing only a few dollars a month.

However, it can add up over time. So check with your provider about any processing fees, and determine if that amount is worth it for the convenience of using a credit card.

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Is it bad to pay for car insurance with a credit card? The Bottom Line

As long as you can pay your credit card bill each month and aren’t maxing out your spending limit, then it’s not bad to use a credit card to pay for car insurance.

Just remember to be aware of any processing fees your provider may charge. Also, keep a close eye on your credit score if it’s used to determine car insurance rates in your ZIP code.

Now that you know how to buy car insurance with a credit card, it’s time to enter your ZIP code into our free quote comparison tool below to receive rates from the best companies in your area.