5 Purchases You Should Think Twice About Putting on Your Credit Card
It can be tempting to use your credit card to pay for all your purchases, especially when you’re low on cash – however, due to high fees and interest rates, making the wrong credit card purchases can cost you much more than the price of the product or service you’re looking to acquire.
With that said, let’s take a look at five purchases you should think twice about putting on your credit card;
Cryptocurrencies are extremely volatile which makes them inherently risky. And they’re even more risky if you purchase them with a credit card – that’s because, if the dollar value of the crypto you purchase goes down, you’ll essentially lose money on the asset you purchased while also having to pay back the money you used to buy it in the first place.
In other words, you’ll be spending money (and losing it twice) just to buy one crypto asset with your credit card.
Moreover, buying crypto with your credit card would cost you more as crypto-exchanges already charge high gas fees for transactions – coupling that with the already high-interest rates on your credit card would mean paying extra on your purchase.
It’s tempting to make your mortgage payments with your credit card when you’re short on cash, but it’s not a good idea to do so.
In fact, most credit unions and banks won’t let you make your payments with a credit card.
Although there are third party lending platforms that will let you set-up your mortgage payments with a credit card, it’s best to avoid these platforms as they will make you pay more than you usually would in the form of processing fees.
Medical bills are infamous for how expensive they can be. Regardless of the fact that you might not be able to outrightly afford your medical bills you shouldn’t use your credit card to settle them.
Credit cards can have high interest rates and you don’t want to mix this with expensive healthcare as it will put you in a position where you have to repay a ton of money.
If your medical bills are due and you can’t afford to pay, you can approach the hospital’s financial department to set yourself up with a payment plan for your bills.
However, ensure that you read the fine print on your payment plan and you understand the obligations and interest rates.
Interestingly enough, the rates offered by the hospital might be lower than the interest you would pay your credit card company.
You can pay your taxes with your credit card, but it’s not the most cost-effective approach as you would be charged a processing fee for your tax payments.
This fee usually is around 2%; this might seem small but it can add up to a lot depending on how high your tax payments are.
If you can’t afford to pay your taxes, you can approach the IRS to set you up with a payment plan which would most likely be lower than the interest rate your credit card company offers you.
A lot of car dealers won’t let you buy a car with your credit card – that’s because of the high fees associated with processing credit card payments.
Making a large purchase like a car with your credit card would increase your credit card balance and if your balance rises above 50% it can affect your credit score.
If you don’t have enough cash to buy a car, it might be a sign that you should put it off for a while or pick one you can afford.
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