By Sabrina Karl

If you’re in a position to charge most of your expenses to a credit card and pay the balance off in full every month, paying with credit offers several perks, such as rewards, increased purchase protection, and lowered liability in case of fraud.

But just because you can pay a certain bill with a credit card doesn’t mean it’s always a smart choice.

First off, there are a few categories of bills that are simply not payable by plastic. These include most loans, such as mortgage, auto loan, and student loan payments. Rent and life insurance premiums also cannot generally be paid with a credit card.

But in some categories, though the default way to pay is via your checking account, an optional method is offered to pay by credit card. This is where you need to pay close attention.

First check if there is an add-on charge for paying by credit card. Categories where this is common are utility bills and home and auto insurance premiums. Federal and state tax payments also can usually be charged to a credit card.

Next, do the math on whether the credit card fee is worth it. Occasionally, they are reasonable. For instance, the IRS’ charge for paying with credit is on the low end, adding about 2% to your payment. If you use a credit card that pays 2% cash back, it will be a wash for you. But if you only earn 1% cash back, you’ll lose money on the transaction.

More commonly, the added credit card fee ranges from 3% to 5%, or even more. Few cardholders will be able to make up that much of a fee with earned rewards, so when the fee reaches this level, you’ll be better served by paying with your checking account.