10 things you should never buy with a credit card

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Through Cherise Nelson / GOBankingRates

Credit card can make your life a lot easier, but they can also create significant financial headaches for you when used to buying the wrong things. If you think you can use your credit card for all purchases because of the perks and rewards you will get, think again.

Here is a detailed list things you should never pay with a credit card, and why it would be a bad idea to do so.

Mortgage payments

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If you run out of cash for a month, it might be tempting to make your mortgage payment with a high limit credit card, but that way of thinking is problematic. For one thing, many mortgage companies won’t let you pay off your mortgage with a credit card. While there are third-party companies that will let you use your credit card to pay off your mortgage, they often charge a fee for this convenience as well, which will only add to the amount you pay in bills each month.

If you’re able to bypass your mortgage manager and find a way to pay off your mortgage with a credit card, it’s still a bad idea if you don’t plan to pay off your card balance in full each month. : you’re already charged interest on your mortgage, so why add more interest how much you put on your credit card balance?

Plus, charging a large amount like your monthly mortgage payment will reduce the amount of credit you have, which could lower your credit score.

Guarantees

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While creditors (other than your credit card issuer) won’t be able to tell you that you have charged a deposit, there is always a good reason not to post this transaction on your card. Since a deposit is considered a cash advance by credit card issuers, paying a deposit with a card usually means that you will have to pay a fee (usually around 3%, but it could be higher) as well as ‘higher interest. rate (like 25 percent).

Other payment methods

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Other payment methods include everything from money orders to person-to-person cash transfers, and are also generally considered a cash advance. While it might be handy at the time to use your credit card for such purchases, you will end up paying a lot more than you expected, including a one-time fee of around 3% and a higher interest rate. Student.

Medical bills

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When you don’t have enough cash to pay medical bills, one of the worst things you can do for your current and future finances is put them on your credit card. Medical care is expensive, and paying for it with a credit card that will charge you high interest on top of that is a bad idea.

If you have large medical bills that you can’t pay right away, don’t pull out your credit card – contact the hospital’s financial services and make a payment plan. Chances are, you’re paying a lot less interest in the hospital than your credit card issuer will charge you.

Tuition fees

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Just like medical expenses, the cost of tuition far exceeded the cost of living. If you are a broke student, it can be very convenient to use your credit card to pay for these tuition fees.

The best reason not to do this is because you won’t be able to pay off your credit card until you have to start paying interest. Additionally, many schools will charge a 2 to 3 percent convenience fee for the “privilege” of paying your tuition with a credit card. Bottom line: it’s not worth it. If you’re having trouble paying your tuition on time, talk to your counselor or your school’s Bursar office; they will tell you what types of low-interest student loans, grants, scholarships, or work-study programs are available to help you pay for your education.

Your taxes

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While it’s possible (and perfectly legal) to pay off your debt to Uncle Sam with a credit card, there’s a great reason you shouldn’t: your tax preparer will likely charge you a convenience fee. from 2 to 3% for the use of a card. If you only pay taxes in the hundreds of dollars, these fees won’t cost you much. On the other hand, if you owe Uncle Sam thousands of dollars, that 2-3 percent fee can really add up. If you think you really can’t pay all of your tax debt when due, talk to your tax preparer or contact the IRS ahead of time and work out some sort of payment plan. You can find out how to do this by visiting the IRS official website.

Automobiles

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Do you think this is a crazy idea? People did. However, many car dealerships do not accept credit cards because the fees for processing a credit card transaction are very high. However, if you find one ready to take your card, it will likely charge you a 1-2% transaction fee. In doing so, you are adding that amount to the price of the car – and it could cost you hundreds of dollars.

As well as paying more than you should, with many cars costing well over $ 10,000, you are likely to be maximizing your line of credit, which will cause your credit score to drop. Why not borrow from a bank or credit union if you don’t have all the money you need? You could get rates close to 3% or 4%, compared to around 15% interest on an average credit card. In addition to getting a great interest rate, you will add an auto loan to your credit report, which will improve your credit score.

Deposits of any kind

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If you don’t have the money for the down payment on a loan, don’t get the loan – you obviously can’t afford it. You add a high cost to the selling price of your item – the high interest rates on a credit card. If you have to borrow, wait and save your money for the down payment; When you are finally eligible for funding, complete an application.

Your business start-up expenses

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A business without a credit rating will have a hard time getting a credit card without the personal guarantee of its owner, company officer, or board member. For this reason, many people who are starting a new business report their expenses to personal credit cards.

This is a terrible idea, as it usually takes at least several years for a business to become profitable. In the meantime, you are paying extremely high interest on debt that you cannot afford to pay off immediately. If your business goes bankrupt, you are liable for all costs.

If you need to borrow money, you are better off with a small business loan, which is usually around 4.5%.

Virtual currency

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Many people will tell you that buying virtual currency like Bitcoin is risky no matter how you buy it, but buying with a credit card adds even more risk. The world of Bitcoin is unregulated and many operators are shady; the reason you should be wary of virtual currency sellers who accept credit cards is that it is very risky for them to do so – buyers can call the credit card company to waive the charge while still retaining the virtual currency. Be careful when giving your credit card information to a third party seller.

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