10 Purchases You Shouldn’t Make With Your Credit Card

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Many credit cards offer a slew of incentives to consumers to use them — cash back and other rewards — and many protect the cardholder with zero liability in case of fraud. But credit cards are not always your best form of payment, and it sometimes may be in your better interest to keep them tucked away.

Here are 10 purchases you should probably avoid making with your magic plastic:

1. Household bills

There can be a major problem with this approach for many people: If you are already cutting it close for the month, you may be tempted to take care of the utility, cellphone or cable bill, just to name a few, with the card. But if you’re not paying off your full balance each month, the interest you’ll be charged will make those monthly bills even more expensive.

If you are indeed responsible with your credit cards and are attempting to rack up rewards, this should be done at your discretion, but only if you have cash on hand to fully cover the transactions each month.

2. Cars 

Car dealers often don’t allow this, or may limit the amount of the purchase price you can put on your credit card. The 1 to 3 percent fee from the card company to process the transaction will cut into their profit.

You could exercise the cash advance option. But you’d pay a fee and a higher interest rate and also get no grace period on the interest. It begins to accumulate right away.

Go to a credit union or a bank to get financing approved at a reasonable interest rate before you shop for a car.

3. Student loans

If you can’t afford to pay your federal student loans, you have options like an income-based repayment plan, deferment, forbearance and possibly loan forgiveness. Take a look at “Finding Help With Your Student Loans” to learn more.

Paying your student loan debt with a credit card will only increase the amount of interest you’re paying on the debt. Even if you have a 0% introductory credit card offer, it will expire in time.

And while the federal government will accept a credit card payment for loans in default, many student loan servicers won’t allow this form of payment.

Says CreditCards.com:

Shifting student debt to credit card debt rarely makes sense financially, and if you go into it thinking you may eventually discharge the debt in bankruptcy, you’re at best betting on yourself to fail, and at worst, committing fraud.

4. Retail therapy

Think a new purchase will cheer you up? Cash is king in this case so your credit card balance won’t spiral out of control. Plus, keep in mind that the positive feeling you get from buying something is usually short-lived.

5. Medical bills

Last year the Consumer Financial Protection Bureau ordered one of the providers of medical credit cards to refund $34 million to customers after it accused the company of deceptive enrollment practices. If you use a medical credit card available through your health care provider’s office to pay your bills, be careful to read the fine print about your obligations.

Better yet, talk to the provider about working out a payment plan.

Also consider steps you can take to reduce your health care costs. See “10 Ways to Fight High Medical Bills.”

6. A night on the town

Handing your credit card to an unscrupulous waitperson equipped with a skimming device isn’t the only thing you need to worry about. If you’re out on the town throwing back drinks, it’s very easy to run up a tab you really can’t afford.

In these scenarios, it’s best to pay with cash and save yourself remorse.

7. Big-ticket items that you can’t immediately afford to pay off

I am well aware of the purchase protections that accompany many credit cards, and credit cards should be used for big-ticket purchases. But buying something on credit when you can’t afford to pay it off right away isn’t smart for a number of reasons, a high interest rate and a risk of a late payment or default are just a few.

8. Credit card payments

You can’t charge your monthly credit card payment on another credit card. But perhaps you’ve been tempted to use a cash advance from a credit card to bolster your checking account so that you can pay your other bills. We’ve already explained how cash advances work. Your credit card is not an ATM and should not be used as one.

There are real benefits, however, to transferring high-interest credit card debt to a new card with a generous 0% balance transfer offer. Just be aware of the balance transfer fee and the length of the offer, and decide if it makes financial sense.

From our Solutions Center: Find a better credit card in seconds

9. “Sale” items

Convinced that you may miss out on savings if you don’t purchase a specific item on sale right away? That’s one of the warning signs of an impulse buy. Wait a day and think about whether you really need it; nine times out of 10, the answer will be no.

You aren’t really saving money if you’re spending money for something you don’t need, and buying with a credit card makes the transaction even easier to digest.

10. Unsecured online purchases

Does the Web address have an “https” at the beginning? If not, that’s your cue to take your online shopping elsewhere. In fact, do your homework before you purchase anything online to make sure a company is reputable and not the source of many consumer complaints.

Your credit card should be perceived as a last-resort safety net. It’s up to you to be a cautious and knowledgeable consumer.

What purchases do you refrain from making with your credit card? Let us know in the comments below or on our Facebook page.

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Comments & discussion

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  • Dale

    Rewards were the reason I liked to use my debit cards to pay bills – of course, some bureaucrat did away with those perks. Debit cards are a good option because you can’t spend more than you have on deposit. It can be a humbling experience to get your debit card declined for a $20 dollar utility bill because the gas station took $90 bucks from your account for ten dollars of gas!

  • LovestoEat

    I beg to differ on at least one of these instances using your credit card to make a purchase. I had cash in the bank to use for my down payment of $7,000. towards my new car. I opted to use my cash-back reward credit card instead, which the auto dealer said they would not accept. But…when I told them I was no longer interested in the deal and started to leave they suddenly decided to accept my credit card for the down payment. Hence, I earned a tidy sum on my cash-back using my credit card and went home with my new car and promptly paid my credit card balance off so I did not incur any interest.

  • senior3citizen

    Since debit cards are not safe to use on the internet, I use my credit card for all purchases-including utilities, medical bills, etc.- then transfer that money from my checking account to the credit card account – that is instant payment. Being able to check your credit charges within hours of posting and can catch a possible fraud charge I consider less of a hassle than trying to deal with a possible fraud debit charge. I do not write checks – I use “Bill pay” and in some instances it takes longer to post and can cost you a late charge. With thieves hacking ATM’s, and some retailer’s not having proper safety measures debit cards are not safe these days.

    • ModernMode

      I don’t do any online banking or bill pay. Hardly a month goes by without there being a new hacking scandal with millions of accounts hacked. I stick to paper checks for paying bills whenever possible and have never had a problem.

      • Jason

        Despite the news headlines about hacking, the majority of theft is done the old fashion way: a waiter or waitress copies down your information directly from your card. Everything they need is right on the card. I purchase quite a bit online with credit card and use online bill payment and have never had a problem.

        The only time I’ve had my credit card information stolen was a card that I never used online. The bank froze the card on the 3rd unauthorized purchase and contacted me. I verified the purchases were fraudulent and the card company sent me a new card next day air. I wasn’t responsible for any charges and it only took about 10 minutes of my time.

  • Malcom Treadway

    My credit card is my bank. I use their money for an extra 25 days. I earn a few bucks back for what I charge. I always take that modest sum and apply it to my outstanding balance as a credit. I put virtually everything – recurring household bills, gasoline, groceries, you name it – on my card. I have a budget. My monthly income stays in my bank account, where it earns (a paltry .75%) interest. When the credit card payment is due, I pay it off completely. It’s all about perception and concept: just don’t treat your credit card as though it is “money” above and beyond your actual income. It isn’t.

    • Joseph Freitas

      There is no reason to not use your credit card to make payments that you could have made with cash or check. Like utility bills, etc. Free 25 days of interest, fraud protection, rewards, tracking.
      @Moneytalks – Who reviews these articles?

      • Malcom Treadway

        They’re written for the bottom rung of their target audience.

      • bethaliz6894

        This works for responsible people like us that pays the credit card bill in full every month. Its the people that think “Free cash” are the ones this article is written for. I charge everything. Between cash back and no interest and amazon using cash back awards, I make money shopping. :)

  • Patrick Seitz

    Another good reason, I think, to not put college on a student loan is that a lot of times the interest on student loans is tax deductible. The interest on credit card debt is not.

  • bigpinch

    I have an exception, too. When my only automobile died I had to replace it, immediately. Living out in the country, there is no public transportation option. The best deal I could make with the dealership on a two-year old truck was 8% interest. Since I had carried a zero balance on my four credit cards, I got a lot of promotional rates for cash loans from them.
    I took advantage of one such promotional loan and transferred the balance on the truck to the card at 3% interest for the life of the loan. I put pencil and paper to the deal and saw the advantage before I jumped at it I’d already figured out that I could afford the monthly payment at the dealership so when the interest rate got lowered, instead of taking a lower monthly payment, I increased the monthly payment to the card a little bit and was able to pay the truck off sooner. An unexpected advantage was that money I’d paid on the 8% deal which was a loan “insurance” was refunded to me in cash by the insurance company. And, btw, 10 years and 140,000 additional miles later, I’m still driving the truck and haven’t had a car payment in a long time.

  • Kathy Bergquist

    I receive 0% interest offers all of the time from credit cards. I only take advantage of them when I need to. About four years ago I was in pain but the doctors were at a loss for 6 months what was causing it. I have insurance; its pays 80/20. The $25 dollar co-pays were adding up fast. I knew this pain was going to cost me so I accepted one of the credit card deals. Thank god I did. $3000 would have cleaned my savings out and then some.

    I felt so good after my surgery four months later, I took advantage of another credit deal from Menard’s, also 0% interest, and changed my flooring from all carpet, including the bathroom (yuck!) to laminate tile and replaced my bathroom sink. I ripped out the carpet myself. The surprise costs was replacing the sub-floor in the bathroom and the out-pipe for the toilet. That totaled over $2000 on the credit cards-supplies for the floor and the bathroom sink and the rest for the plumber. $1000 out of pocket for the guy that did the floor work
    .
    Hopefully, I will be able to use another credit card deal for the house damage from the hail storm I had in June. I already have the insurance money sitting in my credit union collecting interest.

  • Al Seaver

    I use my c.c.’s for everything possible as I get cash back on them and I pay my charges in full every month. Getting something back trumps getting nothing back every time. If you can’t or don’t pay the cards off every month, that’s your problem.