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When Not to Use Your Credit Cards

When Not to Use Your Credit Cards

August 11, 2016
credit cards

Credit cards are great, and can help you acquire those things that you’ve always dreamed of. Not only that, they can also come with discounts or other rewards, which can make shopping even more fun. However, plastic is not always the best form of payment.

In some cases, you should avoid using your credit card. Especially if you don’t want to deal with debt. Here are some examples:

1. Medical bills

Medical bills tend to cost a lot. So, if you miss a payment or two, you could find yourself under a mountain of debt. If there is no other way, if you really must pay for your medical bills with your credit card, then make sure to read the fine print about your obligations. It’s a lot better to know what you’re getting yourself into.

2. Student loans

Don’t rush to use your credit card when it comes to paying off your federal student loans. There are other options. These include income-based repayment plans, deferment, forbearance and possibly loan forgiveness.

Many student loan servicers won’t accept credit card payments. Not only that, but using plastic to pay for your student loan debt can increase the amount of interest you’re paying on the debt.

3. Credit card payments

You can’t pay a credit card with another credit card. And if you’re thinking about using a cash advance from one credit card to pay for other bills, then think again. It’s never a smart thing to treat your credit card like an ATM. That’s because cash advances come with no grace period, interest rates that resemble those used by loan sharks, and transaction fees. These can all bury you in debt.

4. Cars

Most often, car dealers won’t accept credit card payments. It’s because they don’t want to pay the fee charged by credit card companies to process the transaction. That’s why many people think of cash advances in these situations. But we’ve already explained why those are a bad idea. Instead of using a card, it’s better to go to a bank and get financing at a reasonable interest rate.

5. Household bills

A lot of people are tempted to use their credit cards to pay for utilities. But make sure you pay off your full balance each month. Otherwise, the interest you will be charged with will increase your monthly expenses even more.

6. When going out for drinks

Partying with friend is great, and you’ll look like a hero if you buy everyone a round. But make sure that you won’t end up looking like a fool. There are waiters or bartenders out there, with skimming devices, who won’t think twice about stealing from you. Use cash and you will never regret it.

7. Things you can’t normally afford

Buying something that you can’t afford to pay right away is one of the biggest mistakes you can make. Especially if you don’t really need those expensive things.

8. Making unsecured online purchases

Always make sure that the web address has an “https” at the beginning, when you shop online. If the website is not secured, don’t enter your details! In fact, do some research before buying online and make sure that the seller is respectable.

9. When things are on sale

Just because something is on sale, doesn’t mean that you have to buy it. Think twice before making unnecessary purchases. If you don’t really need them, then you definitely don’t need the debt that comes with them.

Thomas Hookton

Thomas Hookton is a finance journalist, history buff and science fiction connoisseur. Hit him up via email.

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