At DollarsAndSense, we’re strong advocates of using credit cards smartly for things you need and would spend cash on anyway. In addition to getting an interest-free advance on that money, you’ll earn rewards in the form of cash back, miles, and rebates.
Unfortunately, there are many types of expenses that you need spend money regularly but don’t get rewards because they don’t accept credit card payments. CardUp wants to solve this problem.
CardUp’s value proposition is simple but compelling: What if you could earn the same credit card rewards for things like paying rent to your landlord, college tuition, insurance premiums, and other categories of expenses you previously couldn’t use your credit card for?
Let’s explore how it works and whether you should take advantage of it.
Read also: Why you should always choose credit cards instead of debit cards
How CardUp works
CardUp is a service that makes bank transfers on your behalf and then charges those amounts (plus a 2.6% transaction fee) to your credit card. This allows you to earn cashback or airline miles on those expenses that you wouldn’t have otherwise received. Your recipient doesn’t need to sign up for CardUp or know about it.
Using CardUp is really easy.
Step 1: Register for an account on their website.
Step 2: Add the credit cards you want to use CardUp for your payments and earn rewards with.
Step 3: Set up one-time or recurring payments.
That’s all! You’ll receive notifications when your credit card is charged and when the payment is credited to your recipient’s bank account. There’s also a handy dashboard where you can view and modify your specified payments or change the cards you want to use.
Benefits #1 Earn credit card rewards on spending that is otherwise ineligible
As mentioned above, the biggest advantage of CardUp is that you can use your credit card to pay for common expenses like rent, insurance, tuition fees, etc.
Payment types such as insurance premiums are usually excluded from earning rewards by banks, but with CardUp you can still earn miles, cashback and points, so you can get more out of your mandatory spending.
Benefit #2: Ability to automatically schedule recurring transactions
Another benefit of the CardUp service is that it automatically schedules recurring payments, so they happen automatically and without any action on your part. This convenience can be very attractive, as no one enjoys paying the same installments every month.
Remember that you must schedule your payments at least five days before the desired transaction date. Three days before each scheduled transaction, you will receive an SMS notification reminding you so that you can cancel or change it if necessary. This is very useful in case you have forgotten that you do not have to make a payment that month or need to change the amount to pay.
Benefits #3 You can use CardUp even if your recipient does not accept credit cards
CardUp will make a bank transfer to your recipient, so it doesn’t matter if they accept credit cards or not, nor do they need to be registered with CardUp.
CardUp already has many recipients on its platform, but if you still can’t find yours, all you have to do is set up a new recipient for the transfer to go through. What’s more, you can even set up recurring payments so you don’t have to log in every month just to transfer the same amount.
Disadvantages No. 1 Processing fee
CardUp charges a processing fee of 2.6%, so the convenience of paying by credit card should be worth at least that.
Alternatively, if you use CardUp for cashback or airline mileage rewards from your credit card, it is important that your card’s rewards exceed the processing fee.
If you own the UOB PRVI Miles Card, a card that is extremely popular with mileage lovers, you will earn 1.4 miles per dollar (mpd). This is what your cost-benefit calculation would look like over a year:
Pay 3,500 US dollars for monthly rent/insurance/car loan with CardUp: $3,500 x 12 = $42,000
CardUp transaction fee: $42,000 x 2.6% = $1,092
Miles earned: $(42,000+1,092) x 1.4 miles per day = 60,328
With 60,328 miles you can redeem an Economy Saver return ticket for Cape Town, South Africa, and explore the summit of Table Mountain! Purchasing an equivalent ticket would cost you around $2,200, meaning you’re effectively saving more than $1,000 – with no additional expenses you wouldn’t already be paying for!
Disadvantages #2: Rewards depend on your credit card provider
All credit cards have different exclusions regarding the type of credit card spending that can earn rewards, as well as caps on the amount of rewards you can receive per month.
You can ask your bank or the CardUp team how your CardUp payments are categorized and what you earn from the transactions.
Disadvantages #3: Limited number of available payments
CardUp currently supports numerous payment types such as rent, insurance, income tax, seasonal parking, condo maintenance fees, etc. This already makes it immensely useful, but we would love to see even more payment types supported.
If you cannot find payment methods on the dashboard, you can still set them up in the “Miscellaneous Payments” category and CardUp will verify the payment.
Also read: 7 online shopping hacks all Singaporeans should use to save money
In its current form, CardUp is already a service with a valuable and powerful use case today. If you like the convenience and flexibility that CardUp offers, it could be useful for you and is worth signing up to try it out.
Don’t forget to use our promo code below to get $30 off CardUp fees on your first payment.
Pay with CardUp to earn miles and cashback on your credit cards for purchases that were previously not accepted with credit cards
Now you can continue to earn miles, cashback and points on your credit cards for payments where credit cards are not accepted. Use the promo code DNS FREE and get $30 off CardUp fees on your first payment. Sign up for your free CardUp account today. Terms and conditions apply.
This article was first published in September 2018 and has been updated to ensure the accuracy of the information.
The post Pros and Cons of Using CardUp for Your Recurring Bills appeared first on DollarsAndSense.sg.
