When it comes to spending money on high-priced items, or items that simply aren’t in your budget, it can be tempting to charge the payment to your credit card. While credit cards should be paid off immediately to avoid interest charges, there are some purchases that should never go on credit. The CGS Team is sharing 5 purchases that you should avoid using credit on. These purchases should be budgeted for and paid for with your hard-earned cash!
Avoid Using Credit on These Purchases…
A student loan is a form of debt that most of us have after graduating college. The issue with paying student loans on a credit card is that you’re hit with double interest. Your student loan already charges you interest in itself, but to put the payment on a credit card (and not pay it off immediately), you will be charged interest on the credit card too! If you can’t must payments for your student loans, reach out to the lender for a possible repayment plan or forbearance.
We’ve all been there. The night out with friends that results in a $100 bar tab! It’s very tempting to “leave the tab open” when you’re purchasing drinks at the bar, but doing so can result in you spending more than planned for. This is especially true with bar tabs put on credit cards. Since credit cards have high limits, it can be easy to not worry about the bill adding up. Open the tab on a debit card and you will be keeping a count of what’s being charged, at least until the alcohol kicks in!
For young women like many of the CGS members, medical expenses can be few and far in between. That doesn’t mean that ones that do come up should be paid for on a credit card. Depending on how your insurance works, you may be required to pay for certain expenses out of pocket. If this is the case, first use any HSA or flex-spending accounts offered to you by your employer. After that, pay for these bills directly out of your checking account. Since medical expenses can come with a hefty price tag (and even if yours doesn’t), there’s no sense in paying more in interest.
Cell Phone Bill
Most cell phone bills run customers $80-$150, depending on the plan and services. For the lucky few who are on a family plan and don’t have to pay too much, keep it going! For the rest of us, paying a cell phone bill on a credit card can result in major interest if the credit card isn’t paid in full each month. That $100 bill will add up quickly if not watched. Avoid the possibility of paying interest all together by having the bill automatically deducted from your bank account.
Similar to the bar tab, charging your shopping trip on a credit card can cost you some serious dough! There’s a level of comfort that comes from using a credit card because of the limit it has. The mindset that you can spend up to that limit takes over and you forget about the fact that whatever is spent on your credit card needs to be paid off along with the interest that accrues. If you need to update your wardrobe, make sure to budget for it.
If you have enough funds and self-control to pay off your credit card in full each month, then make use of it! If not, avoid it at all costs, especially for the purchases listed above. Do you have specific purchases that are paid for on credit? If so, what are they and why do you pay for them on a credit card? Leave a comment below to get a discussion going!
2 thoughts on “Avoid Using Credit on These Purchases”
My tip is not to use credit cards for big repairs on an older model car. If you can afford to it may be better to invest in a newer car and use your old car as a trade-in.
I use my credit card for things that are needed. Some examples are: groceries, gas, products like shampoo/conditioner, deodorant, etc.! I know that I will always be able to pay the complete payment each month since these things I always plan in my budget anyways. If by chance I do use for shopping or a trip, I will make sure I have enough or will have enough in my checking account so by the time the payment is due, I can make the complete payment to avoid interest 🙂