Regarding any information in this post about taxes: this is miles information, not tax advice. Consult a tax professional before paying your taxes with a credit card.
Plastiq is an online bill payment processing system that “empowers you to use your existing debit and credit cards to pay any bill, regardless of acceptance”. The charge for that convenience is 2.5% of each payment on a credit card and 1% on a debit card. At the moment they accept Visa, MasterCard, and American Express. You can pay with Visa, MasterCard, and American Express gift cards as well but the 2.5% credit card fee is applied.
You simply specify who you want to pay, and Plastiq pays them either via check or electronic transfer depending on what the recipient accepts. You are notified once your payment is received.
Who and What You Can and Cannot Pay via Plastiq
Examples of Who and What You Can Pay
- Anyone providing a good or a service
- Tuition and housing fees
- Taxes (income and property)
- Car payments
- Home loan payments
- Home repairs/construction
Examples Who and What You Cannot Pay
- Yourself (cash advances)
- Recipients who have not provided a good or service (i.e. you can’t pay your friend back for lunch)
- Recipients that are located outside the United States or Canada (however the sender can be)
- Payments to savings accounts, trust accounts, retirement accounts, health savings accounts, or similar
- Payments to 529 Education Savings Programs
Plastiq’s Referral Program
Everyone that signs up on for an account on plastiq.com is given a referral link they can share with anyone new who is signing up. You and the person both receive benefits once they make a payment of $20.
The following screenshots were taken from Plastiq’s blog:
FFDs are “Fee Free Dollars”–basically amounts of payments you can make without the card processing fee. You have 90 days to use the FFDs after you earn them.
If you decide to sign up for Plastiq after reading this article, please consider using my referral link.
Previously (like April 2015, for example), Plastiq has charged only 2% for processing MasterCards for promotional spans of time. It also appears that they are charging (at least some people) only 2% for all MasterCards at the moment, despite the website claiming 2.5% for all card types. If anyone else has gotten this rate for a MasterCard let us know in the comments.
Also, last month they offered a fee of only 1.75% if you paid your taxes with a MasterCard. I believe this was only sent out to people with plastiq.com accounts. I received an email notification about it. Register now and see if you get the same email next year:
The asterisk after MasterCard signifies that you can’t pay all types of taxes, only these kinds:
The lowest fee I’ve seen in the past is 1.87% for processing taxes on credit cards, so this promotional rate is the best I’m aware of.
The Company’s Reputation Thus Far
The following statement is from plastiq.com’s terms and conditions page:
“Delivery of funds to the Merchant typically takes between forty-eight (48) and seventy-two (72) hours but may take additional time.”
We can all understand that sending a check takes longer than an electronic transfer. But these FlyerTalkers complained of waiting over a week or even longer, which can be a real issue when we’re talking bill payment. The good news is that it appears Plastiq has been improving on this front in recent months, at least on this FlyerTalk thread.
I think a wise move– when paying a bill to a new recipient– would be to send a small amount way ahead of the time the bill is due and wait to see how it long it takes. If it is received in a timely fashion, then send the remaining amount due. This way you’ll know how long it takes for future payments to that recipient and you can schedule accordingly. You can auto-schedule recurring payments on plastiq.com but only if the amount is the same each month.
Is it Worth the 2.5% Fee?
On the right cards and in the right circumstances, yes.
The only cash back card on the market right now that would be worth putting your bills on via Plastiq is the Discover it card, and only if you’ve opened one within the last year. The Discover it® Miles Card earns 1.5% back on all purchases and Discover doubles that at the end of the first year of card membership, meaning you get 3% back. 3% >2.5% processing fee, so you definitely come out on top.
But you can do much better with your returns.
Often the effective rebate on meeting a minimum spending requirement is 20% or more. That means if you pay your large bills via Plastiq that are otherwise not payable on credit cards in order to open more cards and meet more minimum spending requirements, the 1.87% fee can be a drop in the bucket compared to the rewards you’ll earn.
If you’re not trying to reach a minimum spending requirement for a sign-up bonus, I wouldn’t use Plastiq for bill payments on cards that earn 1 mile per dollar as I don’t value any miles at greater than 2.5 cents (for example, my highest valued point is SPG at 2.5 and highest valued mile is Virgin America mile at 2.3 cents each).
Meeting Minimum Spends for Sign Up Bonuses
The Ink Plus by Chase is a Business credit card offering 70,000 Ultimate Rewards after spending $5,000 in the first three months, but only until May 15, 2016 and only if you apply in a Chase branch. Ultimate Rewards transfer 1:1 to United, British Airways, Singapore, Korean, Southwest, Virgin Atlantic, Hyatt, and more. The annual fee is $95, and it is NOT waived for the first year during this 70,000 point promotion.
If you paid $5,000 of your bills via Plastiq on this card, the processing fee would be $125. I value Ultimate rewards at 2 cents each, so you’d essentially be paying $125 for $1,500 worth of points (75,000 Ultimate Rewards, which you’d earn from the sign up bonus and the 1x on spending it takes to get there).
There is a similar offer with a 60,000 bonus point offer you can apply for online if you can’t make it to a branch. From meeting that minimum spend via Plastiq it’s like paying $125 for $1,300.
While I can not directly link to the current Ink Plus offer, you may find it by clicking below if you decide to apply. (I receive a commission, and your support keeps this blog going.)
But don’t forget the Chase 5/24 rule. If you’ve opened five cards within the last 24 months, you will most likely get denied for this card.
This card comes with 40,000 bonus ThankYou Points after $4,000 in purchases made with your card in the first three months the account is open, along with a plethora of benefits that more than make up for the pricey annual fee. You can read all about it in my review of the Citi Prestige Card.
If you opened the Citi Prestige® Card and paid $4,000 worth of your bills with it via Plastiq, you’d be paying $100 for 44,000 ThankYou Points. I value ThankYou Points at 1.9 cents each, so that’s like paying $100 for $836 (44,000 ThankYou points from the sign up bonus and the 1x on spending it takes to get there). But you can stretch their value even more if you redeem on a premium cabin award like Singapore Suites on Singapore Airlines, considered to be the nicest First Class in the world by some people.
Application Link: Citi Prestige® Card
Until June 22, 2016, the Platinum Card from American Express Exclusively for Mercedes-Benz comes with 75,000 Membership Rewards after spending $3,000 in the first three months. Membership Rewards transfer to around 20 hotel and airline programs including Delta, Singapore, British Airways, and Virgin America.
The card has a $475 annual fee in the first year. But, like the Citi Prestige® Card, it comes with huge benefits like airline fee reimbursement, airport lounge access, and hotel status. If you paid $3,000 worth of your bills with it via Plastiq, you’d be paying $75 for 78,000 Membership Rewards. I value Membership Rewards at 2 cents each, so that’s like buying $1,560 for $75.
This card is similar to the Citi Prestige® Card in that in comes with many benefits that help offset the cost of the steep annual fee. If you spend $5,000 in the first three months after you open it, you get 60,000 American Airlines miles. If you paid $5,000 in bills via Plastiq on it, you’d be buying 65,000 American Airlines miles for a processing fee of $125. I value American Airlines miles at 1.5 cents each, so that sign up bonus along with the miles you earn to get it is worth about $975 to me.
While this isn’t the biggest return from a sign up bonus, people with a lot of bills to pay should consider it from the angle of meeting this card’s yearly spending threshold if status with American Airlines is something you’re eyeing. Spend $40,000 in a year and get 10,000 Elite Qualifying Miles, which will send you on your way to earning status with American Airlines.
Application Link: Citi® / AAdvantage® Executive World Elite™ MasterCard®
Nearly any bill that you couldn’t pay before on a credit card you now have the opportunity to pay via Plastiq.com. It costs 2.5% for any MasterCard, Visa, or American Express payments. I would definitely use Plastiq to help meet minimum spending requirements, as that provides extremely fruitful returns. I would not use Plastiq for everyday spending, since it is difficult to get enough value out of your miles to make up for the 2.5 cent charge on every dollar.