If you carry at least one credit card, you will always find yourself wondering when to use it and when to put it away.
Like most, you probably have a clear idea of what makes the most sense in regards to credit card purchases. For example, many people purchase gas and groceries with their credit card.
Conversely, there are a few things you should never buy with a credit card. Here is a short list:
1. Mortgage payment. This is a bad idea on many levels. First off, most lenders won’t allow it. And while you may find a company that allows you to work around the system, you’ll end up paying a fee for doing so. Add this to interest if you don’t pay off your balance in full, and it’s easy to see why this is never a good idea.
2. Medical bills. As tempting as it may be to pay medical bills with a credit card, you should fight this at all costs. The problem with this is simple: you’re likely to carry a balance from month to month, making your medical bill even more expensive due to interest charges. The better alternative is to contact the provider and negotiate a lower payment.
3. College tuition. You need to pay your tuition, right? Well, even if you think a credit card is your only option, this is something to avoid if possible.
The downside of this is that you won’t be able to pay off your balance before interest begins to accumulate. Along with this, some institutions charge a “convenience fee” for paying with a credit card.
If you make this decision, you may end up with a large credit card bill and student loans upon graduating.
4. Taxes. Have you come to find that you owe the IRS a lump sum of money? If so, it may be tempting to pay by credit card as a way of putting this behind you. Before you do this, reach out to the IRS to discuss arrangements for a payment plan. This may be the best way to get back on track, all without having to rely on a credit card.
5. Business startup expenses. There is no denying the fact that many companies have got up and running thanks to access to a credit card. However, just as many have relied on this strategy and been burnt in the end.
As your business grows, it often makes sense to use a business credit card. But during the startup phase, this could cause more harm than good. If you need money, don’t hesitate to consider a small business loan. The primary benefit of a loan is the lower interest rate.
Have you ever purchased one of these things with a credit card? Do you agree that it was a mistake? Share your thoughts in the comment section!