While it is easier than ever to pay for almost everything with a credit card, this doesn’t mean it is the best choice for every purchase. The Federal Reserve noted that credit card debt surpassed $1 trillion in 2017, making outstanding credit card debt reach its highest point ever. Here are six things that Experian advises against putting on a credit card.
Putting yearly taxes on a credit card is tempting. Taking this route, unfortunately, ends up costing more than what people expect. In addition to paying fees to third-party filing software companies, the IRS may charge up to two percent in processing fees when individuals pay their taxes on a credit card. Better options include payment plans through the IRS or short-term personal loans.
Never pay for college tuition on a credit card. In almost every case the interest on a student loan is going to be lower than interest on a credit card. Some universities may add a processing fee when a person pays with a credit card. Additionally, a person’s credit score may be affected when putting a large purchase on a credit card since it changes the credit utilization ratio.
Unnecessary Expensive Items
Never put anything that is not necessary on a credit card if you cannot pay the total by the end of the billing cycle. If there is an offer for a zero percent introductory rate, it is wise to calculate how much it will cost to pay back the money each month before the card starts gaining interest.
Instead of immediately whipping out a credit card and charging medical bills, a better option may be to work with medical providers that offer payment plans with low interest or no interest. Some medical providers may allow a person to negotiate their bill to a lower price before setting up a payment plan.
Stocks and other investments have their benefits. It is a bad idea to use a credit card to make these investments because of the high risks that are involved. The potential losses are just too significant. If you want to try the stock market or put into a business, make sure that you have the cash on hand. If not, this can drive you into debt.
While most home loan lenders do not allow individuals to use their credit card to pay their mortgage, there are third parties that offer this option. In addition to charging huge fees, not paying off the balance at the end of the month means more compounded interest. A person’s credit could be impacted as well since much of better credit could be used up.
Call a Local Monroe Bankruptcy Lawyer
If you’re in over your head, you might need an expert to take a look at your case and advise you on your situation. Call E. Orum Young at 318-450-3192 or schedule a consultation today. With more than 35 years of experience and 20,000 claims filed, you can stay sure that your financial health is in the best hands.