Credit cards may just seem like a piece of plastic, but they hold a lot more power than that. Many people throughout the US fall victim to debt and find themselves drowning in bills that they their credit card would save them from.
While credit cards are nice to have, you shouldn’t rely on them to pay your expenses and live off of. If you are living outside of your means because you have a credit card, you will find yourself in debt and it will not be easy to pay off quickly. If you do find yourself in this position, make sure to get rid of your credit card debt before making additional purchases.
Since credit cards are not always the wisest payment choice, you should keep the card somewhere safe and not carry it around as you may be tempted to use it. There are some things that you should definitely avoid using your card for and we will go over them below.
You Shouldn’t Use a Credit Card for These 6 Things
1. Purchasing a Vehicle
You never want to purchase a vehicle on a credit card because you will end up paying an interest rate on the purchase right away and the rate is often higher than a loan. In addition, most car dealerships will not allow you to use a credit card as it eats into their profit.
If you are purchasing a vehicle, try to secure financing first, and, if anything, only put your down payment on your credit card.
2. Large, Expensive Items
If you know you cannot afford that new 4K ultra TV, don’t put it on your credit card. While it may be nice to have in your home, it is not a wise purchasing decision. The only time you should put large purchases on your credit card is when you have the money to pay it off, a cash back credit card, or you receive a discount for putting it on your card.
3. Impulse Buys
You do not want to get in the habit of placing impulse buys on your credit card as this will just lead to frivolous things you do not need. If you feel you want to purchase something, go home, think about it for a few days, and then decide if you need to have the item.
Many times, if you walk away from an item and let the thought stew, you will determine that you truly do not need the item.
4. A Night Out with Friends
If you have a habit of going out with the guys or gals and throwing back some tall drinks, consider your options. Using your credit card is not a wise idea, especially since once you have a couple drinks in you, you may start paying for everyone.
If you have a tendency to do this, simply leave the card at home and only go with as much cash as you are willing to lose. Once you are out of cash, you are done.
5. Student Loans
If you cannot pay for your student loans one month, call your loan provider and talk to them. There are options to help you and often times, when you fall on hard times, you can apply for forbearance.
The downside of paying for your student loans with your credit card is that you will be paying double interest rates – the rate on your student loan and the rate on your credit card. Explore your options first before you give in to the convenience of the card.
6. Household Bills and Groceries
If you tend to use your credit card to pay your rent or to pay off your water and electricity bill, you are actually spending more money each month for your necessities. Think about it for a moment. If you spend $300 per month on your electric bill, yet you pay with it on a credit card with a 10% interest rate, you are actually paying $330 each month, which adds up quickly.
If you have a credit card, it is best to keep it hidden away somewhere until you really need it. If you do not have the cash or budget at one point in time and an emergency comes up, you will appreciate having the card with no balance on it. Remember, make smart purchases with your credit card.
Author: Jeff Gitlen
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