What credit card purchases should I avoid? No doubt, credit cards offer many conveniences and protections, ranging from shopping for items online, building your credit score, earning rewards, and more, but it’s often more prudent to keep the card hidden.
This is because putting certain purchases on your credit card may result in large fees or increased interest rates, thereby canceling out any benefits. To avoid having your benefits canceled or to effectively grow your credit score, there are some expenses you should avoid charging to your card.
In this article, we will be discussing the top 7 purchases you should avoid putting on your credit card. Whether you already have a large debt to pay or you need to restore your credit card, you can read through this article for help. Check out the next outline for some of the expenses/ purchases to avoid paying with your credit card.
7 Credit Card Purchases to Avoid
If you utilize credit wisely, you will pay fewer credit card fees, save on interest, and make it easier to save and pay off debt. It is therefore important you learn what and what not to purchase with your card. Below are the top 7 credit card purchases to avoid;
Mortgage or Rent
One of the purchases or payments you shouldn’t pay using your credit card is your Mortgage or Rent payment. Although several home loan firms and rental agencies don’t accept credit card payments. Even while some third-party firms will assist you for a fee, this is not a smart option.
By the end of the month, you will have compounded your mortgage and credit card interest, making it extremely costly and extremely difficult to overcome. Your home or rent should always be your primary goal to pay each month but resist using a credit card to do it.
Household Bills and Items
There are some household bills and items that you should never use on your credit card for payment. Many utility companies allow you to link your credit card to your utility bill payment to enable you to make fast and quick payments at little cost.
However, the disadvantage is greater than the benefits. You may run into financial trouble and incur additional interest rates or late fees if you exceed your credit card limit or miss payments.
Using credit cards to pay for domestic expenses like food, toiletries, or cleaning supplies is also not a good idea. Ordering these products will cost you a lot more in the long run if you pay interest. Alternatively, link your checking or debit card to your utility company and reduce your household bills whenever possible.
Tuition or Student Loans
Students are inclined to use credit cards as a quick way to pay for college expenses while they wait for financial aid because college is an expensive investment.
Rather than using credit cards, education can be paid for through lower-interest student loans, scholarships, grants, and full-or part-time employment.
Small Luxuries or Vacations
Everyone deserves a little extra boost now and then. Credit cards make it easy to buy lunch or a snack at your favorite local store. However, if you rely on your credit card for every minor transaction, you’ll be shocked at how quickly your balance will increase.
Furthermore, if you finance your trip with credit, you will most likely return to worse troubles than before you left due to increased financial stress. The best alternative is to save for future travel in advance.
Healthcare Payment
As you know, healthcare costs can be high, and if you don’t have enough money to cover them, you may think it’s a good idea to charge them to your credit card. Instead, research your options before seeking treatment to determine how much your insurance covers.
Paying for any hospital expense with a credit card with a significant interest rate can simply increase the total cost. Most medical providers will be able to change prices and provide interest-free repayment programs.
Cash Advancement
Meanwhile, a credit card cash advance provides a simple short-term cash loan through a bank or ATM, but it is expensive. Interest on the amount borrowed begins to accrue immediately, and fees may apply.
Securing a personal loan or customized deals from lenders that convert available credit on a credit card into a cheaper installment loan that transfers cash into your bank account is much easier. There is no loan request or credit check necessary for the latter option.
Business Startup Cost
It’s not a smart option to use your personal credit card to pay for business costs or to fund launch charges. Typically, it takes several years for a business to become successful, during which time you may be paying high interest on the debt you can’t afford to repay.
Maybe acquiring a small business loan is best for you. According to Entrepreneur, credit card interest rates are generally higher than those on conventional loans.
Read More: How to Apply for a Credit Card