The Top 12 Things to Never Buy With a Credit Card
Credit cards make your life easier. They allow you to pay for things instantly. Also, you don’t have as high of a risk of losing it as you would with cash. You can also keep track of your spending very easily. However, there are several things you shouldn’t buy with a credit card. These things may seem like a good idea, but it’s easy to get in trouble with your spending. We’ll go over the top 12 things you should never buy with your credit card. We’ll also explain why we chose them, and why you should avoid them.
Avoid Charging these 12 Things
1. Household Bills
While you may like to pay your household bills on your credit card, it’s easy to get into trouble. If you’re good at tracking your finances, this is okay to do. However, if you tend to forget to pay your balance, you may want to skip this. This is also true if you have difficulty budgeting. You’ll find it very hard to pay your balance off each billing cycle. You can easily have interest charges added, along with late fees.
2. Tuition
Many people believe a credit card gives them free reign to buy now and pay later. However, when it comes to your tuition, this amount is usually high. If you put your tuition on a credit card, you’ll end up paying interest. Credit cards, especially for people just starting out, usually have high-interest rates. Chances are you won’t be able to pay off your tuition in one month. This means you’ll end up paying your tuition in addition to the higher interest rates. There are other financing options available for tuition to look at instead of your credit card.
3. Open Bar Tab
Many people have opened a bar tab and put their credit card down for payment. However, when you mix alcohol and finances, it can get messy. Do this once, and you can easily run up hundreds of dollars in charges. As the night goes on and you drink more, you may not realize how high your tab is. You’ll be on the hook for this bill at the end of the night. If you overindulge, you may be in for a nasty shock in the morning. Additionally, you’ll have to worry about interest if you don’t pay it off. This can become one really bad credit card habit. Leave the credit card at home and pay cash.
4. Taxes
Tax time is coming, and owing the IRS is a scary thought. While the IRS does allow people to pay their tax bills with credit cards, it’s a bad idea. First, the IRS will charge a 2% or 3% convenience tax for using your card. It may also seem like a red flag to many lenders. In turn, this can easily drop your credit score. The IRS has many payment plans available, and they usually have lower interest rates.
One exception would be if you need to meet the minimum spend on a credit card signup bonus. Some signup bonuses can be as high as $3,000 minimum spend to reach the signup bonus threshold. In this case, even though you have to pay a 2% – 3% convenience fee the value of the rewards may be higher. Don’t pay your taxes this way unless you can pay the whole balance off to avoid interest charges.
5. Unsecured Online Purchases
Although EMV credit cards with a chip make it harder to have your identity stolen, they aren’t perfect. The chip won’t help you if you choose to make unsecured online purchases. If you do make online purchases, only use your card on secured websites. This reduces the risk of online credit card fraud and identity theft. Any website you use should have https:// at the beginning of the site’s URL like this site CreditFast.com. This means that it’s a secured site, and safer to buy things with your card or send sensitive information.
6. Vacations
Travel cards make it tempting to pay for vacations with them in hopes of earning free travel. You may earn miles, perks, or cash back. However, since many people book vacations in advance, you’ll see interest charges. If you don’t pay this large purchase off quickly, the interest can start to stack up. This can make you stressed, and it may dim your overall vacation experience. Also, you have to think of the small expenses you’ll have on your vacation for meals and entertainment. If you charge all of this to your card, you’re creating a lot of debt. If you vacation is outside the US, you may also have a foreign transaction fee. You should pay cash for your vacation and limit your credit card spending.
7. Credit Card Payments
Using one card to pay off another credit card through a balance transfer can be a mistake. For some, this is the start of a vicious cycle. You may go over your credit card’s limit. It is important to balance your available credit lines. You may be tempted to make a cash advance. Both of these things have fees and interest rates attached to them. Doing this is a quick way to get further into debt. If you find yourself doing this, you may want to look at your spending habits. Credit cards are not a way to live above your means. You may have to trim back your spending.
If you absolutely need to do a balance transfer these are reviews of the two best credit cards for balance transfers. These balance transfer credit cards have low fees and a long 0% introductory rate.
8. Cash Advances
Almost every credit card company will allow you to take out a cash advance by credit card. This is typically a short-term loan you take out against your credit card. While this may seem like a good idea, you’ll pay for it. Cash advances can have interest rates and high fees every time you do it. Many cardholders also charge a convenience fee for taking out a cash advance. Interest starts accruing immediately. There is no credit grace period on advances as there is with credit card purchases. Emergencies happen, and sometimes a cash advance is unavoidable. But, you should avoid it at all costs and look into building up your savings.
9. Hospital or Medical Bills
If you don’t have insurance, a medical bill can be devastating. Also, high deductibles can make it easier to charge it. You most likely won’t be able to pay this bill off in a month, and you’ll pay interest. If you can’t pay it all at once, look into setting up an installment plan with the hospital. You won’t pay additional interest, and they may give you a discount. There are special medical credit accounts that offer 0% interest for a set amount of time. Read the terms and conditions carefully to learn if this type of program works for you.
10. Sale Purchases
Sales are irresistible for some people. You may quickly start buying something even if you don’t really want or need it. This is called impulse buying, and it’s an easy way to get into debt. It’s also easy to lose track of everything you buy because it’s all sale items. Take a day or two and ask yourself if you want or need the item. You’ll typically find that you don’t, and you can avoid this charge.
11. Big-Ticket Items
If you buy a large item on your credit card, you’ll probably pay it off for months. Unless you have a 0% introductory APR, this isn’t a smart idea. You’ll pay for your item as well as any interest charges you incur. If you take 5 or 6 months to pay it off, you’ll also pay interest for every month. Don’t buy the item if you can’t afford to buy it outright.
12. Everyday Small Purchases
Buying your daily cup of coffee or a sandwich is easy with a credit card. However, all of these small purchases add up quickly. If you don’t pay attention, you can spiral into debt very fast. You should allow yourself $50 or so per week for your small daily expenses. This way, you’ll know exactly what you’re spending, and you won’t pay interest charges.
Bottom Line: 12 Things Never to Buy With a Credit Card
Credit cards can make life more convenient, but it’s also easy to lose control of them. It is important to be able to manage finances using credit cards properly. These 12 things we’ve listed are things you should avoid paying for with your credit card. It’ll help you keep a better reign on your finances, and it may help you form a working budget.
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