Paying with plastic is an ubiquitous method of paying today. And it shouldn’t scare you, it can be really beneficial as long as you are able to pay the whole balance at the end of the month. On the other hand, you shouldn’t use it always and restrain yourself from settling the following fees and expenses.
1) Mortgage. Laying your monthly mortgage payments via credit card is not possible because mortgage companies do not allow this method of paying. There are actually third-party companies that can enable you to pay your mortgage installments this way, but this will eventually lead to paying much more, because these services are usually pricey. Even if you manage to pay it with a high limit credit card, you will pay a higher interest to it at the end of the month, and will leap from debt to debt.
2) Medical bills. These expenses are quite high, so instead of using your credit card for paying it, contact the hospital and ask the financial office to provide you a payment plan. The difference is in the level of interest – you’ll eventually spend much more if paying with your credit card, because you’ll be charged a higher interest.
3) College tuition. There are many alternative paying options that will help you in financing your education. If you decide to use your credit card, there’s a good possibility that you won’t be able to pay off the monthly balance in full along with the school’s high tuition interest (about 15%). Consider other paying methods that are more convenient – scholarships, student loans and work-study programs.
4) Taxes. When using a card for paying taxes, your tax preparer will probably charge a 2-3% percent fee for it. But it actually depends on how much you owe – if we’re talking about a large sum of several thousand dollars, than credit card payments are not a good idea, because those 3% fee will unpleasantly increase.
5) Auto-mobiles. Instead of paying with your credit card, consider getting an auto loan – lower interests and a better credit score. The usual credit card interest is 15%, then the car dealer’s transaction fee is about 1-2% to the car’s price and when all this adds up, you will end up paying a lot more for your vehicle.
6) Vacations. What’s the point of taking a vacation and relaxing, if you get more headaches after it when the vacation bill comes? When you bring cash with you, your budget is limited and there is no risk of getting carried away and unawarely spend large amounts of money.
7) Big, expensive weddings. Getting carried away is also the problem here, because unplanned expenses always pop out . And you certainly want to remember your wedding day and get the best of it. But, does having more expensive ornamentations, a bigger cake or fancy wedding invitations really affects something? Keep your credit card in your pocket for this one.
8) Gambling. Why not pay for a black-jack game with your credit card? Well, gambling is a form of addiction, an irrational habit. So, it is a bad idea to buy your chips with plastic, also due high fees and annual percentage rates related to funding your gambling games, which would only lead you to more financial problems and debts.
9) Bar tabs. How many times happened that you went out with your friends, drinking, and wondered the next day where the money went? But it’s better to have a limited fund in your wallet than to get carried away with your credit card, because then you’ll also pay interest.
10) Down payments. If you’re not capable of financing a loan and laying a down payment – don’t get it, because you obviously can’t afford it. Save up the money for the down payment and make sure that you are financially competent, thus avoiding high interest rates that you would pay if the down payment were to be laid via credit card.