Five Things You Should Never Put On Your Credit Card

/ BY / Credit 101

Most of us have a credit card or two. Whether you use it to collect rewards, cover an unexpected cost, or fund your monthly shopping habit, there's no denying that credit cards can come in handy.

While it may be convenient to use your credit card, it's not always the best decision. That little piece (or pieces) of plastic you’re carrying around in your wallet also comes with interest, which can end up costing you a great deal if you carry a balance on your card.

With that in mind, think twice before reaching for your credit card to pay for any of these things:

Tuition

College is expensive. Tuition, books, living expenses, and other fees add up quickly. Many students use credit cards to cover some of these costs to avoid taking out loans. But student loans are a much smarter move than credit cards. Not only is the interest lower (think 5% instead of 20%), but you don’t have to begin making payments until after you graduate.

Additionally, student loan companies are often more forgiving of financial difficulties than credit card companies; most offer hardship deferments or cap your monthly payment based on income.

Your wedding

The average American wedding costs over $25,000, much of which is funded with credit. In fact, one survey found that over half of brides surveyed put all or most of their wedding expenses on credit.

The most important day of your life doesn't need to be the most expensive, especially if it puts you in debt. With finances one of the main reasons for divorce, entering a marriage with a great deal of credit card can put a strain on your relationship. Opt for a less expensive wedding, or look for creative ways to finance it without going into debt.

Income Taxes

A bill from the IRS is enough to cause panic in anyone when there isn’t enough money to cover it. But putting the amount owed on credit is both costly and unnecessary. The IRS will allow you to set up a payment plan to pay off the balance at a significantly lower interest rate than any credit card.

Interest on taxes ranges between 2 and 5 percent, depending on how old your tax bill is. When you compare that to the average credit card rate, a payment plan could end up saving you thousands.

Medical bills

Even with insurance, bills from surgery or other procedures can be costly. If you can’t cover the cost, most hospitals and medical providers have options for people who can’t afford to pay their bill. Most of them will also offer a discount for those who are uninsured. You can also try and negotiate the balance for a lower amount that you can afford to pay cash for.

If you still end up with a balance, set up a payment plan. Many of these are income based with very low (if any) interest, so your payments are lower than they would be if you put it on credit.

Anything you can't afford.

When it comes down to it, it's best to avoid putting anything you can't afford to pay cash for on a credit card. When you’re in the habit of purchasing things you can’t afford, you end up at a higher risk for excessive debt and financial problems.

Not only that, but maxing out your cards on impulse buys also puts you at a disadvantage if you ever have a legitimate emergency you need to use your credit card for.

Credit cards can be used to purchase virtually anything, but this isn’t always the best move. Avoid putting these five things on your credit card and you’ll save money and free up your credit card for better use.

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  • vernester Sep 1, 2014 7:59:28 AM
    I really need a credit card in paying my bills off .


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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. CreditCardXpo.com recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.