What is Plastiq?
Plastiq is an online bill payment service. It allows you to use a credit card to pay bills that you normally wouldn’t be able to pay with a credit card. Some examples are rent, car payments, and even mortgage. This can be very helpful in certain situations such as meeting a minimum spending requirement to earn a welcome bonus on a credit card.
You can use Plastiq to pay almost any bill in the US and Canada. Plastiq has their own database, but if your payee isn’t in the database, Plastiq will send a check on your behalf. You can set up automatic recurring payments with Plastiq, or you can use it to make a one-time payment.
Which credit cards are accepted?
Plastiq accepts all major credit cards including Visa, Mastercard, American Express, and Discover. This includes both personal and business versions of these types of credit cards.
Visa, Mastercard, American Express gift cards and prepaid cards are accepted, but they are the same fee as a credit card.
Sounds great, right? Of course there is a catch. Plastiq charges a fee each time you pay a bill. I’ll discuss why this fee may be worth it. At the end of the post, I’ll have step-by-step instructions with screenshots so you can get started with Plastiq!
What are the fees to make payments with Plastiq?
The credit card fee is 2.5%. Debit cards have a 1% fee. Plastiq occasionally runs promotions where certain credit cards will have a reduced fee.
Obviously, if a biller already accepts credit card payments, you’re better off paying directly. For example, you can pay your electric bill with Plastiq, but if your electric company already accepts credit cards for no fee, there is no need to use Plastiq. I only suggest using Plastiq to pay bills that normally cannot be paid with a credit card.
Fee-free dollars (FFD) are exactly what it sounds like. Fee free dollars means you do not pay a fee on FFD. For example, $500 fee-free dollars means you can pay a $500 bill with zero fees! Plastiq occasionally runs promotions for reduced fees and/or fee free dollars.
These offers are for new accounts only, but occasionally Plastiq will run promotions for reduced fees on certain cards for existing accounts:
- When you create a Plastiq account, you automatically receive $50 fee-free dollars.
- If you sign up for Plastiq using code 573475, you will receive $500 fee-free dollars after your first payment of $500.
- There is a great promotion for Plastiq payments made with business credit cards. If you make $10,000 in payments using Plastiq before 3/31/19, you receive $10,000 fee-free dollars. If you do the math, that means your first $20,000 in payments only has a fee of $1.25%. This promotion only applies to payments made with business cards such as the Chase Ink Preferred business credit card.
Despite the fee, Plastiq is worth considering in some situations
Here are some scenarios in which you may consider using Plastiq:
Plastiq helps meet minimum spending requirements for credit card welcome bonuses
If you’re trying to meet minimum spend for a lucrative welcome bonus, the Plastiq fees are more than worth it.
- At 2.5%, fees are $25 per $1,000 when using Plastiq
- The welcome bonus on the Chase Sapphire Preferred card requires $4,000 in spend.
- Now I’m assuming you have at least some regular spending that can be paid with a credit card but let’s say worst case scenario you have to spend the entire $4000 by using Plastiq.
- You would pay $100 in fees for $4000.
- If you’re getting the kind of value we often get out of Ultimate Rewards on the 80,000 points you receive from the welcome bonus, those points are worth $1,000 or more.
- The annual fee on that particular card is $95, so your max total cost to earn that bonus is $195.
$195 for points potentially worth $1000 or more is a no-brainer.
After receiving a welcome bonus, whether or not you should continue to use Plastiq basically boils down to one question: are the credit card rewards received from making the payment greater than the Plastiq fee?
Is the value of earned credit card rewards is greater than the Plastiq fee?
If the value of the credit card rewards that you receive is greater than the Plastiq fees, it makes sense to use Plastiq. This really depends on how you value credit card rewards and how advanced you are at squeezing max value out of points (such as utilizing foreign transfer partners with better redemption rates).
If you use a Chase Sapphire to make a payment on Plastiq, you’re going to earn 1 point per dollar. Let’s say you use it to make a $1000 payment.
- Ultimate Rewards earned: 1,000
- Fees paid: $25
I like to make sure I am getting about 2 cents per point when redeeming Ultimate Rewards, but I can often do even better than that. For example, our stay at the Andaz Costa Rica was actually a value of more than 4 cents per point.
If you redeem for business and first class long-haul international flights, the cents per point value gets even higher. On the other hand, there is no guarantee that I (or anyone) will always get more than 2 cents per point in value.
Back to the example:
- At 2 cents per point, 1,000 points are worth $20.
- At 4 cents per point, 1,000 points are worth $40
- $20 is less than the Plastiq fee you paid
- $40 is more than the $25 Plastiq fee you paid
Again, whether or not the points and miles earned is greater than the Plastiq fee depends on how you plan to redeem. If you are certain that you can get more than 2.5 cents per point in value, Plastiq fees are worth it.
Now, if you’re using a card that earns 2% cash back on everything, you always get 2 cents per point (or 2%) value. There is no potential for a redemption that is going to be greater than the Plastiq fee. BUT, if you need to meet a min spend to earn a $500 sign up bonus, you may want to consider Plastiq to help with that. Just don’t use it for everyday spending.
Speaking of cash-back cards, there are a few cards and card combinations that may give you a higher return than the 2.5% Plastiq fee on everyday spending.
Meeting spending thresholds for bonuses is easier with Plastiq
This is a similar scenario to min spend for welcome bonuses. Some credit cards offer bonuses and status when you spend a certain amount (either annually or within a specific time period). Depending on how much you value that bonus or status, Plastiq fees may be worth paying if it helps you meet that spending requirement.
Plastiq may help avoid a late payment (not recommended. Use sparingly.)
I hate to even mention this because I encourage responsible credit card use. Part of responsible credit card use is not spending money you don’t have.
BUT, let’s pretend you don’t have the money in the bank to pay your car note because you just paid your property taxes. Today is January 17 and your payment is Due January 30th. You get paid on February 1. You can avoid late payments by using Plastiq. Again, I do not recommend making a habit out of this.
What bills can be paid with a credit card via Plastiq?
You can pay almost any bill. Anything that has a bill, statement, or invoice should work.
You can even pay a person, as long as goods or services are received. Plastiq may require proof such as an invoice.
- Automobile payments
- Student loans
- HOA fees
- Insurance (auto and homeowners)
- Country clubs
- Employees (see business section below)
There are some limitations as to which types of cards are accepted for certain types of bills. One huge exception is mortgage.
*You cannot pay mortgage bills with Amex or Visa. You can pay mortgage with MasterCard and Discover.
American Express is the most limiting.
You can make these types of Plastiq payments with Amex:
- Residential Rent
- Club Fees & Memberships
You cannot make these types of payments with Amex:
- Student Loans
- Automobile payments
- Business invoices
- Business Utilities and more
Payments not allowed on Plastiq (with any type of card)
You cannot pay friends or relatives, unless services are received. For example, if your sister is your landlord, you can pay her. Plastiq may ask for some sort of proof via email before they will approve and send the payment.
- You cannot use Plastiq to pay your credit card bill
- You cannot make a payment to yourself
- Payments to friends or relatives are not allowed (unless services/good are received as explained above)
- Payments to recipients outside Canada and US aren’t possible
- Investment type products/services such as savings accounts, trust accounts, or retirement accounts are not allowed
- You cannot make payments to Education Savings Programs such as 529
Do you own a business? Plastiq fees may be a non-issue
Businesses can use Plastiq for many purposes, such as paying vendors, suppliers, contractors, and even employees.
Always consult your accountant for tax-related information, but bill payment fees (such as the 2.5% Plastiq fees) are business expenses. This means you should be able to deduct the fees. The tax deduction plus the value of the points earned plus the convenience of scheduling payments may offset the Plastiq fees. Again, I’m not an accountant, but it’s definitely something to look into.
Plastiq does not supply any tax reporting information or forms.
As stated in the beginning of the post, Plastiq is currently running a great promotion for payments made with business credit cards. If you make $10,000 in payments using Plastiq before 3/31/19, you receive $10,000 fee-free dollars. If you do the math, your fee is effectively 1.25% for your first $20,000 in payments. This promotion only applies to payments made with business credit cards.
Visa, MasterCard, and Amex gift cards are allowed. You can add them the same way you would a credit card. Note that Plastiq may impose limits on the number of gift cards you can use within a certain time period.
It is also important to note that gift cards are considered credit cards when calculating fees. That means the fee is 2.5%.
Do I need to worry about cash advance fees?
Payments made via Plastiq are generally counted as regular purchases. In other words, you don’t need to worry about it processing as a cash advance, but there is one important exception.
There have been reports of problems with Visa. Using Visa to make your first payment to a payee was sometimes resulting in cash advance. You can get around this by making your initial payment with another credit card. For example, if you want to pay your car note with a Visa, use a Mastercard to make your first payment. Then next month when you go to pay it, you should be safe using Visa.
If there is risk of a cash-advance charge, Plastiq will notify you via pop up before you submit the payment. If you don’t receive the pop up, it’s safe to assume your payment will process as a normal purchase. Click here for more information.
How far in advance to I need to schedule my Plastiq payment?
This depends on the recipient. If the recipient is in Plastiq’s database and accepts electronic transfers, the payment is usually received within 3 business days. For checks, you should allow 8 business days.
How can I be certain Plastiq will send my payment on time?
When you are making the payment, Plastiq will show you when the payment will arrive. If your payment arrives late, Plastiq will pay your late fees.
Getting started with Plastiq
What you will need:
- The address to which your payment would be mailed if you were to mail a check. If you make online payments, you can find this address on your statement.
- Your account number for the business you are trying to pay. This can also be found on your statement.
- The credit card you want to use to make the payment
After you add your recipient(s) and payment card(s), they are saved to your account. Subsequent payments will not require you to repeat these steps!
1. Create a Plastiq account
Sign up at Plastiq. Use referral code 573475 to take advantage of the current promotions.
After you make your first payment of $500 or more, you receive $500 fee-free dollars. FFD are exactly what it sounds like. With 500 FFD, you can make $500 in payments for zero fee!
2. Click “Add a Recipient”
3. Type the payee’s name and country and click “continue”
The recipient does not need a Plastiq account. Plastiq has a database, so your biller may already be in the system.
4. Select the recipient and click “continue” if you see the recipient and the address is correct.
Chase Auto is in the system already. Double check your statement to make sure the address is correct.
If you do not see the biller or if the address seems incorrect, see instructions below (next section) for “none of the above”.
5. Enter your account number and then click “recipient review”
6. Review details and save
7. Done, now you’re ready to make a payment
In step 4, if you see a different address than what is on your bill or if you do not see the payee at all follow these instructions
Skip to payment section if you’ve already added your recipient.
1. Select “none of the above” and “continue”
2. Select “Paper Check”and click “Continue”
3. Enter the address where you would typically send a check, then click “Continue”
I realize most people don’t send checks; you probably pay online. This address should be available on your billing statement.
4.Enter the type of bill you are paying and the telephone number and/or email of the recipient. Then click “Recipient Review”
Plastiq wants to know what type of bill this is. There are several options to choose from. If in doubt, choose other. They also ask for some contact info. You should be able to find these on your statement.
5. Confirm details, Scroll down, and click “Save”
Now you’re ready to make a payment.
How to add a credit card to make a payment with Plastiq
Once you add a recipient, it will prompt you to add a card. You can also add cards from your home screen
You can add new cards from the home screen or click “add a card now” (as shown above after adding recipient)
1. On the home screen, hover cursor over the credit card at the top right of your screen.
2. Select “Add New Card”
2. Enter your card details, then click “Save Card”
How to make a payment with Plastiq
1. Select the bill you want to pay from your recipients and click “Start Your Payment”
If you have not yet added a card, you’ll be prompted to do so.
2. Type the amount you want to pay and the date you want it to arrive
You can set up auto/recurring payments or you can submit one-time payments.
Remember, if you manually submitted the payee details, the payment will be sent by check. Checks take longer than electronic transfers, so keep that in mind.
3. Type your account number and click “continue”
After you do this the first time, the account number should auto populate