Plastic comes in handy during an emergency, and when you're building reward points or your credit history. But although credit cards can be used for just about any purchase, there are things you should never charge to your card. Sometimes, you're better off using cash or a debit card. Here are 10 things you should never put on your credit card.
1. Mortgage Payments
Some banks do not allow customers to pay their mortgage or auto loan with a credit card. However, if your bank allows this method of payment, you might be tempted if you're short on cash. However, robbing Peter to pay Paul doesn't solve the situation — it complicates it. It's one thing to pay your mortgage with a credit card, and then immediately pay off the credit card. But if this debt sits on your card for several weeks or months, it's a move that can trigger costly credit card debt.
2. Medical Bills
It might seem logical to pull out your credit card and pay off expensive medical bills. However, it's more cost-effective to work out a payment plan with your healthcare provider. Hospitals and doctor's offices are usually accommodating. Depending on the facility, you can possibly pay off your medical bills interest-free over several months, or pay an interest rate that's cheaper than most credit card rates.
3. College Tuition
Unless you're absolutely certain that you're able to pay off this debt before the end of the semester, never charge college tuition to a credit card. Some colleges and universities that accept credit card payments charge a processing fee. However, there are low-interest loan options available, and unlike a credit card, federal student loan repayment doesn't start until after graduation. (See also: Best Credit Cards for College Students)
4. Gambling
If you're cash-strapped, you might take a chance and charge lottery tickets or hit the casino with your credit card. Yet, the chances of hitting it big are slim to none. And even if you win some money, it may not be enough to pay off charges put on your credit card. You could end up losing money, plus dealing with the aftermath of high credit card debt.
5. Weddings
Since one in two marriages in the U.S. end with divorce, charging a big wedding is a recipe for financial disaster. You might be happily in love today, but this can change in the future. And if you use a credit card to pay for an elaborate wedding, you might carry this debt long after the marriage ends. (See also: Say No! 7 Reasons You Shouldn't Get Married If You're in Debt)
6. Vacations
You may crave the chance to escape and clear your head. But if you charge an expensive vacation to your credit card, the excitement of the trip will be short-lived. Rather than coming home with a clear mind, you're forced to deal with a mountain of new credit card debt, which can raise your stress level and kill your vacation high. (See our list of credit cards with the best sign-up bonuses for airline miles)
7. Income Taxes
If you owe Uncle Sam big money, using your credit card is one option for getting rid of your income tax worries. But just like paying your mortgage with plastic, you're basically trading one debt for another. And unfortunately, when you use your credit card to pay income taxes, there's a hefty processing fee based on the amount you owe. Rather than pay with a credit card, contact the Internal Revenue Service to setup a low-interest repayment plan.
8. Bar Tab
If you're hanging out with friends, it might be convenient to start a bar tab on your credit card. However, since cash isn't actually leaving your hand, you can get carried away and splurge on costly drinks. Bar drinks aren't cheap, and if you don't monitor how much you're spending, you'll get a shock at the end of the night. Bring cash instead.
9. Mail-Order Purchases
Rather than shop through mail order, visit a retail in-person or shop online. With mail order, you're required to put your credit card information on the form. Unfortunately, if your order gets lost in the mail, your credit card number can end up in the wrong hands, which increases your risk of identity theft.
10. Money Orders
Using a credit card to get a money order doesn't seem like a big deal. However, your credit card company might view this as a cash advance; and unfortunately, cash advances carry a fee of around 3% of the cost. Also, these transactions have higher interest rates than standard purchases. You could end up paying way more than the value of the money order.
What are some other purchases that should never be put on credit cards? Let me know in the comments below.
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