Nov. 2016 update: Plastiq is now compatible with Discover, meaning you can now use American Express, Visa, MasterCard AND Discover with the service.
June 2017 update: Due to demands from Visa, Plastiq no longer allows mortgage payments via Visa cards.
If you’re a rewards-maximizer, it probably pains you that so many expenses can’t be put on a credit card – rent, mortgage, utilities, tuition and home renovations, for example. While others blithely write checks and set up ACH withdrawals from their checking accounts, you’re thinking about all your wasted spending.
Enter Plastiq. It’s a Canadian company that acts as a middle man between your card and pretty much anyone you’d like to pay with it – in exchange for a fee. Here’s how it works, some possible hiccups, and some success stories from the rewards community.
How it works
Plastic isn’t the first service that lets you pay non-traditional expenses with a credit card. Yet it’s becoming popular due to its sheer flexibility. Other services are limited to rent payments, for example, or let you pay only vendors in their database.
The Plastiq process works like this:
1. Sign up for a Plastiq account and link the cards you’d like to use with the service.
2. Tell Plastiq whom you want to pay, and schedule payments. Fill in the requested information, including how the payee wants to get paid (Check? Bank transfer?) Plastiq may ask for additional documentation to make sure you’re paying a legitimate expense to a legitimate service provider.
Plastiq does not want to be a generic P2P money-transferring service like Venmo. So, as it says in its terms, you can use it to “pay your friend for walking your dog, but not for buying you dinner.”
Unlike similar services, you’re not limited to entities in Plastiq’s database. If your landlord or plumber isn’t already listed, just add them.
3. Plastiq will charge your card for the amount you want to pay the service provider, PLUS a fee (2.5 percent for credit cards, 1 percent for debit cards). It will then send a check or electronic transfer to the entity you want to pay. In other words you’re paying Plastiq to charge your card and then pay the vendor on your behalf.
According to Plastiq’s terms, electronic transfers typically take three to five business days, and mailed checks take five to seven. So if you’re scheduling a one-time payment that’s due on the first of the month, don’t enter it into Plastiq’s system on the 31st and expect it to go through on time.
If Plastiq messes up on its end and fails to deliver your payment by the projected time, it may reimburse you for any associated late fees (read its reimbursement terms here).
Is Plastiq a good way to earn credit card rewards?
We don’t recommend paying fees to get regular rewards. Chances are the 2.5 percent fee Plastiq charges would cancel out any rewards you’d earn. Most cards earn just 1 percent to 2 percent on general spending, and Plastiq doesn’t fit into any common bonus categories.
However, eating a 2.5 percent fee may be worth it when it comes to earning credit card sign-up bonuses. Just got a card that requires you to spend several grand in three months to get 100k bonus points? That’s probably a good contender for Plastiq if you can’t meet that spending requirement otherwise. But that cash-back card that earns 1 percent? Not such a great contender.
Hiccups and pleasant surprises with Plastiq
Plastiq is still relatively new in the U.S., and the rewards community has been diligently putting it to the test, with varying results.
- As of June 2017, it’s no longer possible to make mortgage payments with a Visa card.
- In mid-October 2016, various sources (including Doctor of Credit) reported Plastiq payments being coded as cash advances for Visa cards. This appeared to be an issue with service providers that didn’t already have an existing relationship with Plastiq. To Plastiq’s credit, it displayed a warning message for all those trying to pay with Visa cards.
In case you didn’t know, you do not want a purchase to be coded as a cash advance. In addition to having no grace period for interest, cash advances generally do not count toward sign-up bonus spending requirements.
- You might get an error message when scheduling payments. Frequent Miler encountered this issue when trying to set up recurring payments with a new payee.
- Via FatWallet.com, Plastiq may not a have a perfect track record of making your payments on time. Again, Plastiq does have a reimbursement process for late payments.
- Frugal Travel Guy (who had linked multiple cards to Plastiq) encountered an issue with Plastiq billing the wrong card.
- Plastiq has, in the past, lowered its credit card fees to below 2 percent for certain payments (MasterCard payments of more than $500, for example). That could make it a good choice for more routine rewards-earning, if the card’s rewards currency is valued at more than 2 cents.
- Reddit’s Churning community happened upon this surprise: American Express (a CreditCardForum advertising partner) is coding Plastiq as a small business, meaning 2X rewards through the end of 2016. Plastiq is now officially advertising this as well. The original poster also got 1.5X rewards on a Plastiq charge, due to the American Express Business Platinum’s rewards boost on purchases of $5,000 or more.
- Plenty rewards bloggers have had positive experiences paying bills with Plastiq as it continues to iron out the kinks. Points with a Crew has a rewards success story about using Plastiq for mortgage payments.
- Plastiq has a referral program. If someone registers via your link and makes a payment of at least $20, you get 400 Fee-Free Dollars, which you can use against Plastiq’s processing fees. If you have enough Fee-Free Dollars banked, Plastiq becomes a more sustainable rewards vehicle, as you don’t have to worry about fees cancelling out your earnings.
Updated Nov. 2016