Are You Responsible Enough for a Credit Card?
We’re always excited when we get our first credit card! We can spend to our heart’s desire and not have to worry about expenses until the end of the month—but that devil-may-care attitude follows some of us into adulthood, and that’s why we’re here to break down the best and worst credit card purchases.
1. Mortgage Payments
When you have plastic, it seems like a good idea to charge everything to your card. There’s even more incentive when you have points on the line! However, a lot of big-ticket companies know this, which is exactly why they charge processing fees for the pleasure. Not only will you pay 2-3% percent in fees, but credit card interest is a lot higher than your mortgage’s, so that’s another nasty surprise.
2. College Tuition
You’ll get charged enough interest when you graduate—you don’t need to add credit card interest on top of it. Like a mortgage, you’ll get slapped with an additional 2-3% in transaction fees, not to mention a potentially lower credit score if your usage tips past what you can afford.
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3. Medical Bills
You can’t always afford to clear hundreds of dollars off your medical bills, if not more than that. It’s not easy to avoid plastic after an unfortunate trip to the hospital, but if you can, try to find an alternative. Emergency cash funds protect you from lethal fees and high interest rates that can soar well past initial costs.
4. Rent
If you shouldn’t put mortgage payments on your credit card, that also means rent is off the table. Most institutions charge 2.5% and 3% per transaction, so whatever benefits you may have received are quickly undermined.
5. Monthly Bills
We’ve all heard of the bills piling up, and sometimes they stack well above our heads before we find a way out. The thing is, monthly bill payments don’t really belong on your credit card, especially if you’re just deferring payments. Between the high interest rates and accrued debt, you might just sink into a larger hole.
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6. Business Start-Up Costs
Start-up expenses should come from bank loans or investments—not your credit card. A lot of people underestimate just how expensive it is to start a business, even a small one, and the next thing you know, you have several thousand dollars charged to your credit card.
7. Cash Advances
We all stumble sometimes, and when we’re in over our heads, some people borrow against their credit cards. It seems innocent, but that’s a good way to dig yourself into an even deeper hole. Interest, high transaction fees, and even increased annual rates might just come back to bite you in the backside.
8. Persistent Small Indulgences
We’re not saying you can’t indulge! However, it’s important to track your spending. A couple of online purchases aren’t the end of the world, but those “little” items can stack—quickly—and a lot of credit card holders see scary numbers at the end of the month.
9. Taxes
Isn’t it funny how so-called convenient options always cost money? Paying taxes with your credit card is no different. Though you can legally do it, it’s not the best idea; most institutions charge convenience fees of around 2%.
10. Car Payments
You should only use a credit card like you use your debit card—which means spending what you can afford. A lot of people rack up points with vehicle purchases or simple car payments, but if you can’t make those monthly payments, you’re in for a big surprise.
So, if you can’t use your credit card for bills or mortgage payments, what can you use it for? Don’t worry, you can still put plenty on your plastic!
1. What You Can Afford
First and foremost, don’t spend above your means. Credit cards can get you out of a jam, but they can also throw you down a never-ending pit of debt, which only makes your problems worse. If you know you won’t have enough money for the bill, avoid using your card.
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2. Subscription Services
With so many subscription services out there, we might as well just have cable! Netflix, Disney+, Crave, Hulu, ESPN—you name it. One measly 10-dollar charge doesn’t seem like a big deal until you have a handful of them on your bill. If you don’t want to worry about them right away, you can easily stick ‘em on your card.
3. Travel Expenses
If you can afford it, travel expenses make terrific credit card purchases. You’ll have a ton to pick from, too, from airfare and hotel expenses to new luggage and rented cars. Even a long weekend can cost several hundred dollars, which is a good enough excuse to get those points!
4. Electronics
Ah, yes—designed obsolescence. Strange how that TV from ten years ago works totally fine, but the one you bought last year already flatlined. In today’s day and age, you’ll have to splurge on electronics, and that’s where a credit card comes in handy.
5. Appliances
The last thing we want is to spend thousands of dollars on a new fridge. Sadly, it happens at the most inconvenient times. The good news is that a lot of companies have 0% interest rates on big items, like electronics and appliances. It’s always good to inquire first, but there’s a reason so many people put that dishwasher to their plastic.
6. Groceries
Everyone needs groceries, and credit card companies know it. That’s exactly why so many of them offer incentives for you to use their plastic. You can nab anything from cash back to rewards programs, so don’t be shy about whipping out your card.
7. Online Purchases
Online purchases are a no-brainer! Amazon items, new wardrobes, and even IKEA furniture make solid credit card purchases—especially when you spend within your means. You won’t get hit with insane rates or inexplicable fees, either, which makes it even better.
8. Home Repairs
Some people prefer to tackle at-home repairs on their own. No judgement from us…but you also won’t catch us on a ladder! If you need to call a professional, you can easily charge that to your card; even if you’re charged an added fee, your provider can be a good middle ground between you and shoddy repairs.
9. Gas
Hold your horses—it doesn’t always make sense to charge gas to your card. For some people, it can actually cost more than just paying with cash. But some lucky cardholders can crunch the numbers and see if it actually costs less with any incentives or interest rates in place.
10. Rental Cars
We know what you’re thinking: who wants to put rental cars (and their insurance) on a credit card? Well, here’s the thing: a lot of credit card companies offer rental insurance when you book with them, which spares you the headache of booking with the actual rental company.
