9 Things You Should Never Put on a Credit Card

Using a credit card wisely is crucial to maintaining good financial health. Here are some things you should generally avoid putting on a credit card to avoid high-interest debt and ensure financial stability.

Large Purchases

High-ticket items can lead to significant debt if not paid off quickly. It's better to save for these purchases or use a payment plan with low or no interest.

Everyday Expenses

Regular bills like groceries, gas, and utilities can accumulate quickly. If you don't pay off the balance each month, interest can add up, making these costs higher over time.

Cash Advances

Cash advances often come with high fees and interest rates that start accruing immediately, making them a costly option.

Medical Bills

While it might be tempting to use a credit card for medical expenses, high interest rates can make it harder to pay off these bills, leading to long-term debt. Consider paying medical bills with a credit card that offers 0% introductory interest on medical expenses or using a zero balance transfer.

Travel Expenses

If you're not careful, travel costs can spiral out of control, especially with foreign transaction fees and interest on unpaid balances.

Impulse Purchases

Using a credit card for unplanned purchases can lead to buyers remorse and financial strain. Wait at least a few days before making a purchase to see if you really need it.

Subscriptions and Memberships

Recurring charges can add up quickly. If you forget to cancel, you might end up paying for services you no longer use. Consider alternatives like freemium models or free trials.

Items on Sale

Buying things just because they are on sale, especially if you don't need them, can lead to unnecessary debt. Make sure you genuinely need the item before making the purchase.

Rent or Mortgage Payments

While some people do this for rewards points, it can lead to high-interest debt if not managed properly. Paying mortgage by credit card tells that you do not earn enough or have enough income. Consider other options like budgeting or seeking financial assistance.

The Rule of Thumb: You should never pay anything with your credit card that you can't repay in full before the due date. A credit card can be very useful if you pay before the due date or on it, as you won't need to pay interest. However, interest is heavy if you keep delaying payments and EMIs.

Here are 5 expenses that you should never have on your credit card:

Mortgage or rent

You can choose to pay these by credit card, but it's not recommended. At the least, keep a close attention to any processing fees. If you are a home-owner, it is a strict no-no for you. The only time you should use your credit card for charging mortgage or rent is when you want to meet the minimum amount to get a welcome bonus. This can be the case only if benefits are more than the processing fees and that you have money to repay the loan before being charged interest.

Buying something big

When it comes to a credit card, it seems we have unlimited money. However, it belongs to the bank and you need to repay it soon. So avoid buying big items with it, and certainly not something you can't repay before being charged interest. Your credit limit will be affected too, and by extension, your credit score will be impacted.

Taxes

Generally, you should not use a credit card for tax payments. Unlike bank account transfers, credit card payments cost a percentage of the tax payment. While it depends on your tax processor, this charge can be between 1.87 and 3.93.

Medical Bills

It may seem like a good idea to charge medical expenses on a credit card but it may not be most of the time. It can cost you a lot if you are unable to repay fully before the interest is charged, and the interest in this case can be pretty high. If you are not able to repay a credit card loan with interest, there are always zero balance transfers.

Sudden small splurges

Small purchases can affect you as well. Small purchases accumulate and are not easy to keep track of individually. In their case, as well, you need to repay before getting charged interest. Too many of these purchases can result in a pretty high interest rate.

Proper financial management involves understanding your financial situation and ensuring you can pay off your balance to avoid high interest rates and debt accumulation. Always be mindful of these expenses to maintain your financial wellness in challenging times.