Plastiq: Pay Tuition, Rent, or Taxes With Credit Card or Debit Card

plastiq_logo

Updated. Plastiq just upped their fee for debit card payments to 1%. Previously, there was no fee at all. Just a heads up for those people with plans for future payments. If you have a payment originally scheduled under the 0% fee structure, according to Plastiq you’re still okay as long as you don’t edit them. I’d double-check. Here is the text of the e-mail:

As you may know, at Plastiq we’re always working on ways to offer the very best service at the lowest possible price. Last year this commitment led us to offer a promotional debit card fee rate of 0%. This will be ending effective today, February 9th, at 5pm PT. However, due to the overwhelmingly positive response to reduced debit fees, we’re excited to offer an on-going reduced rate of 1% for personal debit card payments (rather than the standard 2.5%).

Original post:

Plastiq.com lets you pay bills and invoices with a credit or debit card, even if they don’t usually accept them. The service fee is 2.5% for credit cards and 1% for Visa and MasterCard debit cards. However, they run limited-time promotion with lower fees. They will charge your card and send out a paper check to the payee (direct bank transfers to a few), so you’d want to plan ahead for any snail mail delays. They recommend 10 business days to be safe. More ideas from their site:

  • Rent or Mortgage
  • Homeowners Association (HOA) dues
  • Tuition
  • Childcare costs
  • Buying a car, RV, or ATV
  • Income or business taxes

(EXPIRED) The last promotion ran until November 30th, 2015 and lets you make payments with a 1.5% fee for one-time, immediate MasterCard payments.. Here is their blog announcement. No minimum amount required. Does not apply to recurring payments. No special promotional code or sign up required.

Selected fine print:

Thanksgiving is just around the corner, but why wait until then to show how thankful we are that you’ve signed up with Plastiq? To make the holiday even sweeter, we’re excited to share that today is the start of a special promotion. Get a 1.5% rate for all one-time, immediate MasterCard payments to any business! […] This promotion will expire on November 30, 2015 at 5 p.m. PT.

plastiq2

Why would I want to pay a 1.5% service fee?

Sign-up bonus spending requirements. Sign-up bonuses often having spending requirements. For example, you might get a $500 value bonus but need to spend $5,000. Well, that’s effectively 10% back so if you need a little help to get over that hurdle, it’s okay to pay a 1.5% fee. Here are some recent cards with big $500 value bonuses but also spending requirements:

2% cash back credit cards, or similar. If you have a rewards credit card that offers 2% cash back (or equivalent value in points), then you can still make a slight profit by putting them on your credit card. A current example is the Citi Double Cash Card. For example, if you have a tuition bill or tax bill of $5,000 and you earned 2% cash back while paying a 1.5% fee, your net 0.5% is $25.

Combine a rewards card + 0% APR on purchases. Many credit cards offer 0% APR on purchases for an introductory period of 12 months or longer. If the card also has a half-decent rewards program on purchases, the combination of purchase rewards and spreading out the payments over a year at no interest could be attractive.

Comments

  1. Couldn’t you use Plastiq to pay one 2% rewards card with another 2% rewards card, and then swap it and go the other way to get your 0.5% on an automated basis? 😉

    • Couldn’t you do that on a daily basis? Couldn’t you also keep the first transfer in your bank account until both cards needed to be paid off entirely? Probably when the 2% offer expires or changes?

  2. Let’s say you were trying to maximize the 1.5% rate by lining up as many recurring payments as possible. Does anyone see on their website an actual limit on how far you can schedule payments? I see the quote loosely say, “secure the 1.5% rate for payments that are even a year out!” But when I actually tried to schedule some payments, it initially let me schedule all the way to year 2020 (before it generated an error because my credit card expires before then), but I was still able to reschedule it to recur monthly through 2018 with my existing MasterCard. Is there any evidence that I will or will not be able to retain the 1.5% rate for those payments beyond 2016? (Basically, does it say anywhere that I really should just schedule up to a year forward because I’ll lose the 1.5% rate after that point anyway?) Thanks for any insights!

    • You can ask them directly via Twitter or Facebook, but from what I read there is no limit as long as you schedule them during this promotional period and the system lets you. The “even a year out” quote is just an example, not a hard limit.

  3. I have had a horrible experience with Plastiq. Over half of the payments I have wanted to make have been canceled, which caused me problems, and on two of them they took the fee out and refused to refund it. The explanation they have given has been arbitrary and their customer service horrible. They say that they refunded me the two that they didn’t refund. I offered to send them my complete transaction history on the card, and then they said nothing. They seem to not be very organized. I wish I could recommend them, but about all I can recommend at this point is “stay away.” I hope they get better.

  4. Also, Michael, no, they don’t let you pay credit cards with other credit cards. They don’t make that clear on their website. You find that out when they cancel your payment. They also cancel payments to other reputable merchants for no clear reason, and sometimes they ask you why you want to use their service to make a particular payment, as it is apparently their business to know why you do what you do.

  5. Any idea if the credit card used for recurring payments could be changed down the road and still keep that 1.5% rate?

    • Fairly certain that any attempt to change payment details (including credit card used) after Oct 13 will eliminate the special rate. “Additionally, editing a payment after the promotional period will cause you to lose the promotional rate for that payment.”

  6. hmmm, i could just send myself checks probably…

    • Fairly certain writing checks to yourself would violate at least the following of their Restricted Activities in their Terms of Service: “You will not: Send money to yourself; Send money to recipients who have not provided a good or service; Provide yourself a cash advance from your credit card (or help others to do so)”…

  7. Herma Sheynin says:

    Based on the comments and restrictions, not much value to be had here.

  8. Rats! I just paid property taxes in VA. Wish I had know about this on October 1st.

  9. Has anyone successfully used Plastiq? Any pitfalls to setting up auto payments on my approximately $2,000 mortgage payment for the next year on a 2% cashback card?

  10. I recently just started using a similar service to pay my rent. My rent is $1900/month. Typically I would write out a paper check and use a stamp. RadPad charges 0% for using a debit card or 2.5% for a credit card. I signed up for the PayPal debit card that pays 1% cash back, and linked it to my existing bank account from which I would have written the check. Now I make the $1900 rent payment through RadPad using the PayPal debit card, and get 1% or $19 cash back per month instead of it costing me a stamp and a check.

    • Stephen:

      Thanks for sharing the information. I didn’t know about the 1% cash back with Paypal debit card.

      Just curious – why do I need the radpad in this case? can’t I directly use this debit card to setup automated payments for rent, mortgages, gas, electricity etc ..

      Currently I am using my ‘bank of america’ debit card, I was wondering if I can simply transfer all my payments using Paypal debit card and earn the cash back.

      Am I missing anything?

    • Why you linking your PayPal debit card to your bank account? You should open a PayPal/Ebay credit card and link your debit card to that. It pays an additional 1% cashback. So, you get a total of 2%. And Plastiq charges zero fees for using PayPal MasterCard debit card. I just did it to pay my mortgage. Thanks, Jonathan!

      • I am still not clear about the chain ..

        Rent — plastiq — Citi 2% — result in .5%

        Rent — PayPal debit — Bofa — result in 1 %

        • If your landlord doesn’t accept debit card payments, you would need to pay by check. That is what Plastiq is used for – sending a check.

        • Shina:

          Rent — Plastiq — PayPal debit card — PayPal/Ebay credit card — result in 2 % cash back

          • So there is no fee during this transaction?

            PayPal debit card — PayPal/Ebay credit card

            it’s basically paying off your debit card with your “credit card” … I am unable to understand this piece in the equation (everything else seems proper)

          • Nick,
            How do you make a credit card to be a primary funding source for PayPal debit card?

          • Nick:

            I recently came to know that PayPal will discontinue paying cash back rebates on PIN-less debit purchases starting February 01.

            Any other alternatives we can use?

            Thanks,
            -S

      • Hi Nick,

        when I looked at radpad, it says rent only. How do you pay mortgage with radpad? Is it really possible? Please share some more details

        thanks

        • What does radpad have to do with it? I use Plastiq service described in this article to pay my mortgage. I will also use it to pay my city property taxes.

  11. I will give Plastiq a try on a couple of property tax bills for my business and see what happens. BTW for a business the 1.5% is deductible while the 2% rebate on a Citi Bank Card is tax free, therefore someone in the 33% tax bracket the net fee is 1%, yielding a tax free profit of 1%. I am going to pay $2,000 in Property tax bills and take the $20 profit and have a nice lunch!

  12. Shina:

    Actually, it is very simple. Go to your PayPal account. Setup backup funding source for your debit card. I assume you don’t keep a balance in your PayPal account. You can use your checking account as a backup funding source for your debit card. Or if you had a PayPal/Ebay credit card, you can select it as a backup funding source for your debit card instead of your checking account. Does it make sense?

    • I have looked at paypal extra master card, its not providing cash back but 1x rewards for each dollar spend. Please confirm, if I am missing something.

      thanks

      • One point per dollar or one cent per dollar is the same thing. You will simply redeem your points for cash or gift cards.

  13. How does the charge from Plastiq appear on my credit card? What is the Merchant Category Code?

  14. Today’s the last day of the promotion. Has anyone figured out how to pay estimated taxes with Plastiq? Don’t you usually have to send in a form along with the check so the IRS can track what the payment is for, or would something in the Memo Line be sufficient? Anyone actually paying estimated taxes with Plastiq, or is this a bad idea?

    • I think the only thing you need to put is your SSN. That’s what your federal taxes are tied to. The last two years I paid my federal taxes via ChoicePay. They have a flat fee of $3.50 when I used my PayPal MasterCard debit card. That’s not bad at all. Maybe I will try Plastiq in April 2016 and pay zero fees. Kenneth, please share your experience. Thanks.

  15. My mortgage payment finally posted. It was initiated on the 8th, they sent a check to US Bank, and it was posted on the 21st. So, when making payments, make sure you schedule them two weeks before they are due.

  16. Two weeks is some serious lag time. That said 1% on the mortgage… pretty good. Do the ebay to credit card and pull 2-5%… nice.

    • Well, if you mail the payment yourself, you would still have to allow the same amount of time. This way you pay your mortgage with a credit card and the cash is sitting in your bank account earning interest until it is time to pay your credit card bill, which is usually over a month away. For example, my December mortgage payment will be put on the credit card and the bill will be due on January 18. What’s not to like?

    • brankar, Could you please explain how to get 2-5% ?

  17. The Terms of Service (last revised Jul 16, 2015) on the Plastiq website says they make no guarantees on payment delivery dates and are not responsible for fees, penalties, interest, etc.
    The terms also state that if they send funds to the incorrect Merchant or make duplicate payments, they will make every effort (yes of course) to recover the funds and if successful they will be returned to you. If unsuccessful, you will need to deal directly with the Merchant. You are also responsible for reimbursing Plastiq for the payment made.

    The FAQs in the Plastiq website say “If your payment is submitted before the recipient’s specified deadline, but for some reason arrives after the expected delivery time, Plastiq will cover 100% of any late fees incurred on that payment”. To me this sounds like the total opposite. I am not a lawyer, so someone please let me know if I am misinterpreting this.

    On a separate note, I did not see anything that says debit MasterCard does not incur a fee from Plastiq. Was this only on the October promotion?

    I have a question on people using Plastiq to pay their mortgage: Is it just scheduling all your future mortgage payments (as individual payments) before the promotion ends?

  18. Paypal is changing its terms – discontinue paying cash back rebates on PIN-less debit purchases. Is it possible to use any other debit card and get cashback?

  19. NewYorker says:

    Anyone has more information on the Paypal debit card reward term changes (1% discountinuted?) Jonathan? Nick?

    • Still getting 1.5% cashback by using PayPal debit card. Will update everyone if it changes after 02/01/2016.

    • Just got my 1.5% cashback for the period 1/3/16-2/3/16. So one month from today we will know if things changed as far as the comment above about discontinuing paying cash back on PIN-less PayPal debit card purchases.

      • I just got the following email from plastiq:

        As you may know, at Plastiq we’re always working on ways to offer the very best service at the lowest possible price. Last year this commitment led us to offer a promotional debit card fee rate of 0%. This will be ending effective today, February 9th, at 5pm PT.However, due to the overwhelmingly positive response to reduced debit fees, we’re excited to offer an on-going reduced rate of 1% for personal debit card payments (rather than the standard 2.5%)

        So does this mean they will charge 1% on debt card payments? I always thought debt cards was fee free not a promotion. If this is true bye bye Plastiq. with my paypal paying only 1.5% its not worth the effort to me for only a 1/2 percent. anyone with information please inform me and others.

        • I never received that email, and this morning I just submitted a debit card payment through Plastiq with 0% fee.

          • Hey Adam. I just test sampled a debt card payment and the fee is coming up. Maybe they are picking and choosing who pays a fee? anybody else can confirm they are not being charged a fee?

        • I paid another bill last night, and can now confirm the 1% fee. It must have rolled out to my account a little later. I still haven’t received that email though!

  20. I have just checked it, and it shows me 1% fees for my debit card. So finally bye bye plastiq as from this month paypal is stopping 1% cash back.

  21. Yup, I got the 1% e-mail as well. I didn’t even know the 0% rate was promotional.

    As you may know, at Plastiq we’re always working on ways to offer the very best service at the lowest possible price. Last year this commitment led us to offer a promotional debit card fee rate of 0%. This will be ending effective today, February 9th, at 5pm PT.

    However, due to the overwhelmingly positive response to reduced debit fees, we’re excited to offer an on-going reduced rate of 1% for personal debit card payments (rather than the standard 2.5%).

  22. That’s definitely bad news. PayPal supposedly stopped paying 1.5% debit card cashback for these types of transaction. I should be able to confirm that on March 4, when the cashback posts to my account. And now this 1% transaction fee. I guess I will still use Plastiq since my Ebay MasterCard 1% cashback covers the 1% transaction fee. But there will no longer be a monetary benefit. Except for postponing your actual payment by a month when your credit card bill is due.

  23. Jonathan, I think you have a math error in your article. .5% on the $5000 payment would be $25, not $50.

  24. I have another story to share. I used Plastiq to pay my February mortgage. I scheduled it 19 days before the final due date. The check to US Bank was mailed 18 days before the due date. And it took 18 days for the mail to be delivered, opened and for the payment to post to my account. Even though Plastiq says it takes 3-5 business days for First Class mail to reach any institution in the US. Maybe it was US Bank who delayed posting my payment, I don’t know. I just wanted to warn people to be aware that it may take up to 3 weeks. I have done 7 payments with Plastiq to multiple banks. The fastest posted in 7 days, the longest in 18 days. I did call US Bank yesterday and they said they would charge me a late fee if there is no payment that day. Luckily, I also contacted Plastiq and they were nice enough to offer reimbursement in case I got charged a late fee. That’s good to know.

  25. Hey Nick I was going to reply back to you post when I found time. you said “I guess I will still use Plastiq since my Ebay MasterCard 1% cashback covers the 1% transaction fee. But there will no longer be a monetary benefit. Except for postponing your actual payment by a month when your credit card bill is due.

    I was going to respond back and tell you I don’t think it’s worth it. I mean worrying if your payment reaches on time or not with no monetary benefit plus possible late fees and dings on your credit. to me it’s not worth messing with plastiq.

    • Yes, you are correct. It is probably not worth it. Except when Ebay MasterCard runs a double points promotion (usually a couple of times per year). Also, I have to confirm, PayPal debit card stopped paying 1.5% on these transactions. Stay tuned. March 4 will be my next update.

  26. “Earn Cash Back when you use your card online, over the phone or sign up for a purchase. Cash Back will be earned on net purchases when the receipt is signed or when the purchase is authorized as a credit transaction by phone or online. Purchases made using a PIN are not eligible to earn Cash Back.”

    This was taken right from the Paypal Debit MasterCard site. It seems purchase made USING a PIN is not eligible. Is a pin used with a Plastiq transaction?

    • Joe, no PIN is used with a Plastiq transaction. But supposedly they run it as a debit transaction through MasterCard network. The final judgement is still pending. I will report on March 4 if I earned 1.5% cashback on Plastiq transaction. Stay tuned.

  27. I can confirm, I still earned 1.5% cashback on Plastiq transactions using my PayPal debit card in February.

  28. You’ll get $200 fee free dollars (or a $5 savings with a 2.5% fee) after making a payment of at least $20. Make sure you pay at least 2 weeks in advance before your bill is due; they’re that slow.

    https://try.plastiq.com/373722

  29. Plastiq service so far is reliable.. the mortgage payment takes about 5-7 days. The utility payments surprisingly takes 4-5 days. I still send the payments 15 days before the payment due date just in case.
    The credit card rewards help decrease the fees a lot (using my Citi Double cash back CC 2%!)

    If you are a new applicant, I would greatly appreciate it if you’d kindly use my referral link and you will get $200 fee-free dollars.
    https://try.plastiq.com/473671

    Thank you :)

  30. I am still using Plastiq for all my payments. However, I experienced a little issue. The entity I was paying relies on the postmark date. The envelopes sent by Plastiq do not have a postmark date even though they come via USPS. So, just a warning for people who could be in the same situation.

Speak Your Mind

*