Put Down the Plastic! 3 Items You Should NOT Purchase with Credit Cards

We all love having conveniences in our lives, right? Especially when it comes to spending. That’s one of the main reasons we love having credit cards; there is no easier way to pay for necessary, and sometimes unnecessary, purchases. But just because you CAN buy everything with credit cards doesn’t mean you SHOULD (your credit score would adamantly agree with us on this one). Here are three items you should NEVER use a credit card to pay for and why.

1. Medical Bills: Credit Card Cardiac Arrest

It is an entirely reasonable reaction to panic about paying medical bills when they come about. They tend to be astronomically high and you just want to have them taken care of as soon as possible not to have to worry about an additional expense. Don’t let the fear factor trick you into whipping out the plastic!

Credit card
Don’t let medical bills suck all the life out of your credit score by paying with credit cards!

If you pay medical bills with your credit cards, you will pay a heck of a lot more money in interest rates, which probably could be its own medical bill in terms of numeric value when it’s all said and done. Instead, talk to your hospital or medical provider about setting up installment payment plans. This lessens the burden of the medical bill and allows you to avoid paying insanely-high interest rates.

2. Mortgage Payments: Payment Method Remorse

Although there might be times when money is tight and it seems like such a hefty expense, as a mortgage payment is, could be easily taken care of with a high limit credit card. Don’t be fooled by this misguided logic!

Usually mortgage companies won’t even let you pay with a credit card, forcing you to use a third party. That third party will have their own fees for this service, costing you more already. If you then can’t pay your credit card bill in full for that month, you’ll owe more interest, and therefore be paying even more than you would have by not using credit cards for this expense.

Think about it like this: you will end up accruing more debt to pay off another debt, leading to compounding debt. Plus interest. And don’t forget the damage to your credit score. The more debt you have, the more negative the impact on credit score. Not paying your credit card bill on time and in full also lowers your creditworthiness, making you look risky for lenders in the future while continuing to affect your credit score. This item is just a big NO for paying with credit cards.

As important of a payment a mortgage is, take a deep breath and think before pulling out the plastic to cover it.

3. Taxes: Don’t Overspend on Uncle Sam

We are still a bit away from tax season, but that doesn’t make this point any less valid to address. Why? Because unlike a mortgage, paying your taxes with a credit card is a perfectly legitimate and legal payment option. However, it is not what a credit connoisseur would do.

If choosing to pay taxes with a credit card, you would be charged a service fee of approximately 2-3% of your total amount owed to the government. 2% and 3% don’t sound like a lot, but when you consider that you could owe in the thousands of dollars, this becomes a significant amount of money you now have to pay that could have been avoided by not using credit cards.

With taxes always on your mind when thinking finances, it’s hard to resist to easily pay with a credit card. Stay strong and think smart! You don’t want to pay out any more than you need to with outrageous credit card interest payments.

Just like with medical bills, you can set up payment plans with the IRS for paying taxes (plus interest). There are certain requirements to be met to qualify for this payment option, such as amount owed. Even with an interest rate, this is still a far more financially wise option versus paying with a credit card.

Remember that when these expenses come up to put that plastic down, be a money master, and use this information to your advantage to keep your credit score sound and your credit cards free for spending on other necessities. Don’t have the right credit card for you yet?
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