Blogging for Change

What Not To Buy on Credit

by Emilie Burke on
10/6/2021
in Using Credit
Making a purchase with a credit card.

Credit cards can be good for several kinds of purchases. Using them for travel expenses helps you earn points or cash back incentives. Charging business expenses not only allows you to earn incentives but also keep track of business related expenses in one place.

But there are certain things you shouldn’t use credit cards for. Most importantly, if you can’t pay off the balance in one to two months, you should avoid putting it on your credit card.

The Seven Worst Things to Buy on Credit

1. Household Expenses

If you’re trying to stretch your budget to the last penny for the month, it can be tempting to pay your utilities or cellphone with a credit card. But if you can’t pay it off before the statement closes, you’ll be charged an interest fee that could potentially be higher than any late fee you’d pay to the utility company.

2. Student Loans

If you can’t afford to pay your student loan, look for other options like deferment, income-based payment plan, or even a loan forgiveness plan. Using a credit card to pay off your loan will increase the amount of interest charged, therefore increasing the amount you owe.

3. Car

Most dealers don’t allow you to put a car or even a portion of the amount on a card because their processing fees are too high. But even if you can pay for all or part of your car with a credit card, you shouldn’t. The interest rate will be much higher than applying for a personal loan.

4. Retail Therapy

Let’s face it, we all need a little retail therapy from time-to-time. Buying something new makes us happy and cheers us up when we’re down. But putting these purchases on a credit card can allow your spending to get out of control too quickly. Stick with cash instead so you don’t spend more than you should.

5. Taxes

Most people don’t realize that when you process your IRS payment to a credit card, you’re charged an additional processing fee. The fee isn’t charged by the IRS, but a 3rd party payment processing center that charges up to 2.35 percent. That may only be a few dollars if your bill is small, but a $4,000 tax bill can cost you more than $80 in upfront fees. This is in addition to the interest rate your credit card company will charge.

Read more: How to Set-Up a Repayment Plan with the IRS

6. Cash Advances

Using your credit card to get cash is just taking out a personal loan at a very high interest rate. Plus, most credit card companies charge a cash advance fee and a higher interest rate for cash advances. This is a sure way to pay a lot more than you should.

7. Impulse Purchases

Most impulse purchases later become regrets. Before you commit to owing money for something you may not need, take some time to think about your purchase. Wait a day; think about it and decide how you’ll use the item before committing to the purchase.

Being careful about how you use your credit will not only help you maintain a healthy credit score, it can save you lots of money in the long-run.

Issues with credit card debt? A debt management plan might be the best solution for you. Accelerate your debt repayment and save money in the process!

Tagged in Smart shopping, Budget tips, Debt strategies

Emilie writes about overcoming debt, while balancing trying to eat healthy, stay fit, and have a little fun along the way. You can find more of her work at BurkeDoes.com.

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