Never Use Your Credit Card to Pay for These 10 Things

By Mikey Rox. Last updated 31 July 2014. 7 comments

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Plastic comes in handy during an emergency, and when you're building reward points or your credit history. But although credit cards can be used for just about any purchase, there are things you should never charge to your card. Sometimes, you're better off using cash or a debit card. Here are 10 things you should never put on your credit card.

1. Mortgage Payments

Some banks do not allow customers to pay their mortgage or auto loan with a credit card. However, if your bank allows this method of payment, you might be tempted if you're short on cash. However, robbing Peter to pay Paul doesn't solve the situation — it complicates it. It's one thing to pay your mortgage with a credit card, and then immediately pay off the credit card. But if this debt sits on your card for several weeks or months, it's a move that can trigger costly credit card debt.

2. Medical Bills

It might seem logical to pull out your credit card and pay off expensive medical bills. However, it's more cost-effective to work out a payment plan with your healthcare provider. Hospitals and doctor's offices are usually accommodating. Depending on the facility, you can possibly pay off your medical bills interest-free over several months, or pay an interest rate that's cheaper than most credit card rates.

3. College Tuition

Unless you're absolutely certain that you're able to pay off this debt before the end of the semester, never charge college tuition to a credit card. Some colleges and universities that accept credit card payments charge a processing fee. However, there are low-interest loan options available, and unlike a credit card, federal student loan repayment doesn't start until after graduation. (See also: Best Credit Cards for College Students)

4. Gambling

If you're cash-strapped, you might take a chance and charge lottery tickets or hit the casino with your credit card. Yet, the chances of hitting it big are slim to none. And even if you win some money, it may not be enough to pay off charges put on your credit card. You could end up losing money, plus dealing with the aftermath of high credit card debt.

5. Weddings

Since one in two marriages in the U.S. end with divorce, charging a big wedding is a recipe for financial disaster. You might be happily in love today, but this can change in the future. And if you use a credit card to pay for an elaborate wedding, you might carry this debt long after the marriage ends. (See also: Say No! 7 Reasons You Shouldn't Get Married If You're in Debt)

6. Vacations

You may crave the chance to escape and clear your head. But if you charge an expensive vacation to your credit card, the excitement of the trip will be short-lived. Rather than coming home with a clear mind, you're forced to deal with a mountain of new credit card debt, which can raise your stress level and kill your vacation high. (See our list of credit cards with the best sign-up bonuses for airline miles)

7. Income Taxes

If you owe Uncle Sam big money, using your credit card is one option for getting rid of your income tax worries. But just like paying your mortgage with plastic, you're basically trading one debt for another. And unfortunately, when you use your credit card to pay income taxes, there's a hefty processing fee based on the amount you owe. Rather than pay with a credit card, contact the Internal Revenue Service to setup a low-interest repayment plan.

8. Bar Tab

If you're hanging out with friends, it might be convenient to start a bar tab on your credit card. However, since cash isn't actually leaving your hand, you can get carried away and splurge on costly drinks. Bar drinks aren't cheap, and if you don't monitor how much you're spending, you'll get a shock at the end of the night. Bring cash instead.

9. Mail-Order Purchases

Rather than shop through mail order, visit a retail in-person or shop online. With mail order, you're required to put your credit card information on the form. Unfortunately, if your order gets lost in the mail, your credit card number can end up in the wrong hands, which increases your risk of identity theft.

10. Money Orders

Using a credit card to get a money order doesn't seem like a big deal. However, your credit card company might view this as a cash advance; and unfortunately, cash advances carry a fee of around 3% of the cost. Also, these transactions have higher interest rates than standard purchases. You could end up paying way more than the value of the money order.

What are some other purchases that should never be put on credit cards? Let me know in the comments below.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Guest's picture

I completely agree with this post, and would actually take the idea one step further. I suggest you should avoid using the credit card altogether for any purchase unless made solely for convenience. With everyone having debit cards, what sound financial reason would someone have for using a credit card for any purchase, let alone the ten expenditures provided here. Credit cards are a relatively recent development in our society, and maybe we would be better off without them. This is a very important topic for discussion, thank you for bringing it up.

Guest's picture
Kevin Simpson

Not everyone has a debit card. As others constantly note, if you're smart with your money, there is no reason not to use a credit card.

Guest's picture
Jamie Henderson

Joseph,

I have to disagree with you. Credit cards are only bad if the person are not responsible and careful with their spending. If you set a budget and know you can pay the balance off every month, you can rack up some serious miles for a vacation. I was able to travel to a lot of places on miles while not having to pay a penny on interest.

Nowadays with technology, you can set alerts and get notified when you reached a certain credit card amount. This way you know when to stop charging. I understand that not everyone is responsible, but credit card can be in your favor if you play the game wisely.

Guest's picture
Guest

I don't know if you should NEVER do these. I use my cc for my mortgage and rental, medical, vacation, and bar tab. Of course I also pay attention to what I am paying, check the numbers afterwards, know what is available, and pay it off on time every time.

I earn a lot of points for these payments and because I know what is available I don't go over. Paying by cc at the hospital has actually resulted in lower charges than going through insurance (AKA a pre paid plan) because the hospital knows they are getting paid.

In the end, being smart with your money and you will have no problem with using a credit card as the tool that it is.

Guest's picture
Matt

I certainly understand your viewpoint, but I have to disagree with several of these examples. Points 2, 4, and 10 are right on the money, but the others are more of a gray area. Never say never.

Using a credit card for a mortgage payment is a responsible and logical thing to do if your bank doesn't charge a fee to do so. Why miss out on the rewards points you can get or the 2% cash back you could get from the Fidelity Cash Rewards Card. Buy a house and save for retirement at the same time; that's a good deal. Just pay it off every month like you'd pay the bank.

I paid my tuition bills all the time on credit and I made it work for me. Take it as an opportunity to get a few cards with big signup bonuses and charge a manageable portion of your bill rather than taking a student loan. Pay the debt off before the end of the month or when your 0% interest period runs out. It's like a 2% discount on tuition (no surcharge to pay with credit where I went) and who doesn't want that? What a great way to build a history of responsible credit use.

I pay for all my vacations with credit. It's usually the cheapest way to travel internationally (no forex fees, rewards points, fraud protection, and fair currency conversion rates). Just be prepared to pay the bill when you get back. I'll charge anything before I pay my bank 3% to access my own money abroad.

Paying taxes with a credit card isn't usually the brightest due to the surcharges, but you still earn rewards points and can use tax season to your advantage if you play the points game. Good way to meet a sign up bonus or two and profit from the deal. Again, pay off the bill in full when it comes.

If you think I'm giving my debit card and a direct line into my checking account to a waitress or a bartender, you're sorely mistaken. Why not earn rewards points from your nightly indiscretions and protect yourself from fraud while you're at it. If someone swipes my card details, I sure as hell want it to be the credit card company taking the hit.

Long story short: never say never. You can make credit work for you if you're cautious and can exercise restraint.

Guest's picture

You make some great points here and raise issues that are well worth thinking about. Most of the comments also make sense where they disagree, essentially, but I notice all of the disagreement comes with an "if." And it is a big one.

IF we have the money already available for the expense, vacation or whatever, then we can benefit from the rewards, etc. People who read this blog for the most part have already committed to take money management seriously and have developed self-discipline in paying their cards off each month. At least the ones who post; those who don't probably do not want to reveal it.

#10 is something I had never heard addressed before. If you have to pay an advance fee I would certainly avoid that. For me it means little since I cannot even remember the last time I used a money order but for some people it could be an important consideration.

Guest's picture
Guest

There are so many perks to rewards credit cards. They should be used at all times IF you pay them off each month.

Not only can you get cash rewards, but most credit cards extend warranties on certain items. They also usually cover your rental car insurance. Many will even offer some sort of travel insurance and coverage for lost baggage, etc...