With the economy slowly but surely recovering many Americans are pressed to put more and more expenses on credit cards, but that seemingly cheap credit acts like a snake in the grass. A readily available stream of cash can be as intoxicating as any heady ambrosia, but it’s paramount that you remember all those purchases do in fact have to be paid back in full (with extra if you let interest charges build up!). With that in mind, there are a few major expenses that should never be put on a credit card; to be frank, you absolutely will regret it later if you do. The following list contains a number of expenses that should never be put on a credit card.
With the ever-increasing cost of a higher education in the US more and more adults can trace the source of their debt back to their student loans. This danger is multiplied by the fact that many incoming students fail to grasp just how difficult it will be to repay credit card loans; many recent graduates don’t find work immediately after graduating, and growing interest charges will eat up any chance you have at financial stability. Rather than taking the easy way out and looking to credit cards students need to pursue lower interest student loans deals, actively seek out scholarships and grants, consider taking part time work to help meet expenses, and if need be attend a more affordable institution.
Much like your tuition, mortgage payments are yet another major expense and part of life that should never be put on a credit card. If your mortgage payments have reached the point where in order to keep up with them you must use your credit card it’s a good sign that you’re in over your head financially. While many lending institutions won’t even allow you to put such a major expense on a credit card there are plenty of services ready to help consumers get around these stipulations but using one payment service to meet another is clumsy to say the least, and could prove financially devastating in the long run.
This is one of those things that consumers have no reason to ever put on a credit card. If you’ve ever found yourself with a significant tax burden I’m sure you’ve been tempted to charge that IRS demon away, and they’ve even made it very easy for you to do so, but this is a financial blunder for a number of reasons. To begin with, the transaction itself will come with a fee of between 1.88 and 2.35%, so you’ll ultimately end up paying more than you owed in the first place. Not to mention, the IRS offers payment plans with interest rates currently at 3%, which is significantly better than most credit cards’ standard interest rate.
An unnecessarily large wedding
There’s nothing inherently wrong with putting a wedding on a credit card, as long as it’s within your budget. The problem I’ve encountered comes with the ease of over spending. It’s especially important that new couples live within their means, and don’t start off their relationship in debt. So rather than spend an arm and a leg throwing a wedding worthy of celebrities, why not save some of that money and put it towards your first home? After all, you have the rest of your life to spend with your significant other, so why let one day set you back?
Bills paid through the mail
While I’m sure most of you reading could afford to fit your month-to-month bills well within your budget and on your credit card, the question here is security. By having your credit information on printed material you open yourself unnecessarily to fraud and eventual theft. The same goes for debit cards, which have even less fraud protection than a credit card.
That big vacation you’ve been dreaming of
Like weddings, the problem isn’t the expense itself; it’s the risk of over-spending. While I’m sure the gratification from your dream vacation would be very real, it’s important that you remember that the debt won’t go away. Between exchange rates, eating out, renting a room, a rental car, daily excursions, and the flights the charges will build up faster than you thought, and the last thing you need after a vacation is a stressful credit card bill to remind you of paradise. Again, it’s all a matter of living within your means. So instead of flying halfway across the country to Yosemite or Glacier Bay, maybe you should look at taking that camping trip at a state park instead.
Now, I’m not saying that credit cards should be avoided at all costs or are in some way inherently bad. They’re not! In fact, they offer consumers liquidity and a peace of mind when accessing your accounts. But like anything else, they can be harmful when abused, and should only be used in moderation and as part of your budget. If you have any questions about where you stand or would like some more in depth advice about your finances don’t hesitate to give us a call today. We’re here to help, and we’d love to hear from you!
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