Should there really be expenses you should never put on a credit card? I would submit that yes, some expenses should never have any place on that beloved card.
In fact, I am not really a big fan of the use of credit cards. This is because this card has caused more harm than good since its introduction.
I know of course that it has its advantages especially when it comes to emergencies but using it for non-emergencies is a mistake.
At the moment ordinary Americans owe over $13.86 trillion dollars in credit card debt. On average each American family owes about eight thousand dollars in credit card debt.
If you see in the light that in 2019 personal savings only amounted to $1.3 trillion, then you will appreciate why we should be worried about credit card debt.
If you are having problems with credit card debt, I invite you to read, What Is The Best Way To Pay Credit Cards Off.
There is no peace for those that are heavily indebted especially in these tough economic conditions.
I have another post that deals with those struggling to deal with creditors, How To Deal With Creditors When You Can’t Pay
In these tough economic times, it is those that are debt-free that are breathing easy. Their only headache is to find the money for the basic needs, other than worrying about losing their cars or properties.
Avoid debt at all costs and if for any reason you find yourself in debt make sure that it is not credit card debt
In an ideal situation, credit cards should only be used with the aim of clearing those amounts at the end of the month. In that way, you will avoid the high interest you can incur if you go beyond the interest-free period.
If you want to borrow money only do so by finding affordable and less expensive options somewhere else.
I honestly envy those of the old generation who have retired and seem to have no anxieties about debt.
They have paid off their mortgages and beside this, they have enough savings to support themselves comfortably.
Unfortunately, our generation may retire still heavily indebted which is a scary thought.
In the paragraphs below I will present expenses you should never put on a credit card.
1. Mortgage Payments
If there is one payment that you should never ever use a credit card to pay then, it is mortgage payments. Do anything but never use a card.
You can for example borrow from friends to pay the mortgage or you can just contact the mortgage loan lender to ask for a grace period.
In most cases, the interest on the mortgage is on the lower side when compared to credit card interest. It is therefore not wise at all to pay a low-interest loan with high-interest debt.
If you do that you will regret in the long run as the interest piles up.
As I have said before borrowing from friends is a cheaper way of finance as they will not charge you any interest. You can pay them back immediately you get your income.
That way you will run away from the high interest that gets compounded once you start paying only the minimum amounts on your credit card debt.
This is because then it will be interest charged on interest on the remaining amount.
If you want to use a credit card you need to make sure that you pay off the amount during the grace period when there is no interest being charged.
2. Furniture Purchase
Another payment that you should avoid using a credit card is furniture purchase. If you need finance there are other cheaper options out there that are far much better and cheaper.
Buying furniture is one of those big purchases you will ever make and because of that, you need to avoid putting it on your credit card. Over time you will pay far too much in interest.
And to be honest I would advise anyone thinking of buying furniture to consider paying cash other than loan finance.
There is no need for a hurry when it comes to furniture, you can take your time and save some money for it. In that way, you will avoid the curse of debt that has ruined many lives.
Never fall for the so-called zero interest finance. There’s is no such thing as zero interest as the interest element is already factored in the cost.
If you are just starting out, furniture purchase is perhaps one of those unavoidable costs unless you are living in an already furnished house. Or if you are lucky to have parents or friends who can gift you their old furniture then you can avoid this cost.
My advice to those just starting out on their own is to avoid the temptation of buying new furniture unless you have one of those posh jobs.
Unfortunately for the majority of us, we will start out with some ordinary jobs and ordinary wages
There is, therefore, no shame in just opting to buy used furniture. Actually, if you take your time you could end up with some quality used furniture.
I have a post that offers tips on where to buy used furniture. This post will help you avoid the headache of having to borrow to purchase furniture.
For those interested in selling furniture I have another post on the best places to sell furniture.
3. Down Payment
If you have to use a credit card to pay a down payment then that means you are not ready to purchase that thing or service.
There is no harm in waiting until you have enough money for the purchase. The world is still there with its goodies that are not going anywhere.
Nowadays we face all sorts of pressures from trying to be like our friends and the clever salespersons out there.
And it is very easy to feel like we cannot afford to wait and end up entangling ourselves in unfavorable deals that require down payments.
Every day we are bombarded by ads that attempt to convince us that we are useless unless we own the most modern TVs, cars, etc. Ignore such ads.
It is very easy to be shortsighted when purchasing things. However, if you considered everything you will discover that the down payment will accumulate over time.
The lending institutions will be smiling all the way to the bank while you will be struggling to clear your debt.
If for whatever reason you have no choice but get finance then search for the best deals you can ever get. Though I would advise anyone who cares that you avoid debt at any cost.
4. College Tuition
Unless you want to clear the amount before month end, there is no reason why anyone should consider financing tuition with credit card debt.
It is one of the most expensive way of paying for your tuition and you will regret it.
Especially when you consider that there are all sorts of cheap loans out there. Not that I advocate getting a loan for education. I would rather people pay their way through college by working part-time.
But if you have to choose between the two then cheaper federal loans are better.
I know some of you are surprised by my suggestion that people pay for their tuition by working part-time during their studies.
But this is how many foreign students pay for their tuition. They work two or three part-time jobs to raise funds for tuition.
I recently watched a person I know on Youtube explaining how he missed one whole year of studies so that he could work to raise tuition fees.
I however understand that this cannot be for everybody and that foreign students are forced to do this because they cannot access student loans.
5. Medical Bills
Medical bills are another cost that should not be paid by a credit card.
I wish there was a way to avoid this cost. Unfortunately, this is another cost that is bound to happen at some point in our lives.
Even for those covered by medical insurance, there will always be shortfalls when it comes to these bills.
It seems as if the insurance companies have found a way to avoid paying for some costs and shift them to the patients.
In such a situation there is always the temptation to pay by credit card. We just want to do away with such a cost.
However, if you do that you will soon find out that it is a very expensive way of settling such obligations.
If you find yourself struggling to pay for your medical bills, try negotiating payment terms with the hospital.
You will be surprised that you will be offered better terms than paying using your credit card.
Even if the hospital decides to charge interest on the amount you owe them it will definitely be low compared to credit card debt.
Just the mere mention of Inland Revenue Services strikes fear in many hearts. It is therefore understandable for people to resort to the use of credit cards when the taxman calls and no money is available.
Unfortunately, that is a very expensive way of paying for your taxes as there are other options available.
This is because the IRS is more than willing to offer you a payment plan that is cheaper than using a credit card. It is therefore not wise to use the credit card to settle such obligations.
You need to take advantage of the options that are readily available from the tax guys.
7. Wedding Expenses
Where I come from it is almost a must for people to have lavish wedding ceremonies. Due to this pressure, people are forced to use credit cards and other expensive ways to fund their weddings.
Weddings should not be this costly for newlyweds. Couples should not start their marriage saddled with debt.
In my humble opinion if you are resorting to the use of credit cards that means you are not ready for a wedding ceremony.
It means that you should have waited until you were ready. Alternatively, you should have organized a wedding ceremony that matched your resources.
Married life is challenging on its own without adding the burden of credit card debt. These debts can easily be a source of friction in the family. Issues involving money are the cause of many divorces and tensions in families.
You can avoid this by just organizing a wedding that matches your resources. No one should be getting any sort of finance from lending institutions for weddings.
Unless you have the intention of clearing any amount that same month then I see no reason why anyone should use credit cards to buy clothes.
Using a credit card here is anathema and should be avoided at all costs. If you cannot afford to pay cash, then buy second hand from thrift stores or charity shops. But never ever pay by credit card.
Actually the cheapest way to get designer clothing is by buying them second hand at thrift stores or charity shops. I have over the years bought things I would never afford if I wanted to buy them brand new.
What you need is patience for you to find gems in a second-hand clothes shop. You need to visit a number of thrift stores and charity shops for some window shopping first.
After the window shopping, you can then decide to pick the right store for your clothing needs.
There is no point in using a credit card to buy clothes will all these alternatives I have mentioned here.
While you may think at the time of the purchase that everything is alright, overtime you will find that you will pay more.
If you cannot handle second-hand clothes then I would advise that you raise funds first and pay cash for brand new clothes.
I hope you have learned one or two things about expenses you should never put on a credit card. Following these tips will help you live a comfortable debt-free life.