Seven Payments To Never Put On A Credit Card

Credit cards can be a great financial asset. However, they can become a problem if not used properly. Just because you can pay for anything (and everything) with your credit doesn’t mean you should. In fact, there are certain expenses that you should never put on a credit card.

1. Furniture

Furniture is the top item that we (and all money experts) believe shouldn’t be financed, no matter how enticing the offers may be. Financing can make furniture items you otherwise cannot pay for seem affordable, pushing you to spend more than you had planned and increasing your debt.

2. Taxes

Taxes always feel like an additional financial burden, and you may sometimes feel tempted to pay them via your credit card, especially when your tax bill is unexpectedly high, or you have some other expenses sprung up out of nowhere. But we strongly recommend against using your credit card to pay taxes. The IRS charges up to 2% extra on payments made through credit cards as a merchant processing fee. You will have to pay even more if using third-party filing software.

If you’re hard-pressed for money, asking for a payment plan from the IRS or getting a short-term personal loan are better options (even though they may not seem so) than putting taxes on your credit card.

3. Mortgage Payments

Most mortgage providers do not accept payments via credit cards, but there are many third-party service providers who can help people with it for, of course, a handsome fee. You will only be increasing your expenses and debt this way.

4. College Tuition

There are multiple reasons why we believe paying your college tuition with a credit card is the worst idea. Firstly, you will be charged a processing fee that could be up to 3%. Secondly, it will significantly increase your card utilization ratio, which then can also affect your credit score. And lastly, the interest rate on student loans is almost always lower than what you would pay on credit card payments.

5. Medical Bills

Paying for healthcare can be a big burden when you do not have insurance. But relying on your credit card to pay your medical bills is a surefire way to get yourself in trouble. Several healthcare facilities run welfare programs for people who cannot afford healthcare costs. Many also offer low or zero-interest payment plans. Look for these options instead of using your card.

6. Holidays

Going on a holiday on a credit card may feel like a free trip, and you can have countless excuses or explanations to convince yourself why you deserve that trip. But the truth of the matter is that nothing justifies taking a vacation on your credit card. If you really need a break, there are countless other ways that do not involve putting yourself in debt.

7. Down Payments

No matter what you want to buy, if you don’t have enough money for the down payment, you clearly can’t afford it, and you will only increase its cost by making the down payment via your credit card. It doesn’t make any sense. If it’s something that you really need to buy, save up for the down payment.

Use Your Credit Card Wisely

Let your credit card be a blessing and not turn into a curse by using it responsibly and wisely. You don’t want to get yourself into huge credit card debt. It will not only affect your credit score but will likely put you in severe financial distress.