How to Pay Bills in Installments

Your Options, From Lowest to Highest Cost

When a bill is too big to pay at once, there are several ways to split it up. They aren't equal: some are free, some charge fees, and some charge interest. Try them roughly in this order.

1. 1

   A payment arrangement with the company you owe

   Often free. Utilities, hospitals, landlords, and many service providers will split a balance or extend a due date if you ask.

2. 2

   Assistance programs

   Free or low-cost help for utilities, rent, medical bills, and phone service may cover part of the bill before you need a plan.

   Find bill payment alternatives
3. 3

   Budget billing

   For utilities with seasonal swings, a levelized monthly amount based on your average use can prevent large bills from arriving at once.

4. 4

   A bill installment service

   A third party pays the bill and you repay it in installments, usually for a membership or per-bill fee.

5. 5

   Credit: a card or personal loan

   Interest-bearing options. Best kept for several bills at once, or when cheaper options aren't available.

Payment Arrangements With the Company You Owe

This is usually the best place to start because there's no new lender and often no extra cost. When you call:

1. Ask for the billing or customer assistance department.
2. Explain the situation briefly and say what you can afford each month.
3. Ask whether there's a fee or interest, and what happens if you miss an installment.
4. Ask whether you'll also need to pay new charges on time while you're on the plan. With utilities, you usually do.
5. Get the arrangement in writing.

Some states require regulated utilities to offer specific plans. Ohio, for example, requires its regulated electric and gas companies to offer several options for spreading out a past-due balance. Hospitals and doctors' offices commonly offer plans too, and medical bills have extra protections worth knowing.

Budget Billing for Utilities

Budget billing sets your monthly utility bill to a predictable amount based on your average use over the past year. You still pay for what you use: the utility reviews the amount periodically and adjusts it, and any difference is settled up. It's most useful when heating or cooling makes some months much more expensive than others. Most utilities require your account to be current to enroll, so it's a tool for preventing future shortfalls rather than fixing a past-due bill.

Bill Installment Services

Some companies will pay a bill on your behalf, or send you the money, and let you repay them over a few weeks or months. They're usually priced with a monthly membership, a per-bill fee, or both, rather than interest.

They can help in a pinch, but read the terms carefully:

• Total cost. Add up the membership and every per-bill or expedite fee for the whole time you'd use the service. A fee that looks small can be large relative to the bill.
• Timing. Ask when the bill will actually be paid. If the service pays late, you may still owe late fees to the original company.
• Missed payments. Find out what happens if a repayment fails, including fees and whether the service can retry the charge.
• Cancellation and refunds. Check how to cancel a membership and whether fees are refundable if the bill isn't paid.
• Credit reporting. Some report payments to credit bureaus, and some don't.

Federal regulators haven't issued specific consumer guidance on these services, and how they're regulated can depend on how a particular service is structured and on state law.

Paying Bills With a Credit Card

Paying a bill with a credit card gives you until the card's due date to pay. If your card has a grace period and you pay the full statement balance by the due date, you generally won't owe interest on those purchases. If you carry a balance, the card's APR applies.

Two costs to watch:

• Convenience fees. Some billers, or the payment processors they use, charge a fee to pay by card. Check with the biller before you pay.
• Cash advances. Using your card to get cash, or paying a bill in a way the card company treats as a cash advance, usually comes with a fee and interest that starts right away.

When a Personal Loan Makes Sense

A personal loan is a different kind of tool. It charges interest, shown as an APR, and it's repaid over months or years. It's not equivalent to an interest-free payment plan, and it usually costs more than one. It can make sense when:

• You're behind on several bills and want one fixed payment instead of several plans
• A provider won't offer a plan and wants payment in full
• The loan's total cost is lower than the late fees, reconnection fees, or higher-rate debt you'd otherwise face

Our comparison of personal loans vs. bill payment plans goes through the trade-offs in detail.

Protect Yourself From Bill Payment Scams

Scammers pretend to be utilities and other billers, demanding immediate payment by gift card, wire transfer, cryptocurrency, or a payment app, and threatening to cut off service. Real companies don't do that. If you get a threatening call or message, hang up and contact the company using the number on your bill.