Plastic fantastic? Not always! While credit cards offer convenience and rewards, swiping them for everything can land you in a financial dilemma. This guide unveils 15 buys better suited for cash or debit to keep your credit card healthy and your wallet happy. Understanding the reasons behind these no-go zones allows you to become a credit card master and watch out for unnecessary debt. So, let’s dive in!
Cars and Homes
Why Not? Cars and houses come with hefty price tags. Putting them on a credit card might seem tempting for reward points, but the high interest rates will significantly increase the overall cost. Additionally, down payments are typically required, and credit cards often don’t cover them.
Better Option: Secure a loan with a lower interest rate specifically designed for these large buys. This allows you to spread the payments over a longer period with minimized interest charges.
Groceries and Gas
Why Not? The reward points might be tempting, but everyday buys add up quickly. The interest rates on credit cards can outweigh the rewards, especially if you don’t pay your balance in full each month.
Better Option: Use debit cards or cash for everyday expenses. This helps you stay within your budget and prevent impulse purchases. Consider designated grocery store rewards cards or gas station loyalty programs with substantial savings and no annual fees.
Cash Advances
Why Not? Cash advances come with a hefty upfront fee and a much higher interest rate than regular purchases, making them a very expensive way to access cash.
Better Option: Explore other alternatives like a personal loan or dipping into a savings account (if possible) before resorting to a cash advance, especially for emergencies.
Student Loans
Why Not? Student loans are designed to finance education with lower interest rates compared to credit cards. Credit card debt adds a significant financial burden on top of your existing student loans.
Better Option: Exhaust all scholarship and grant opportunities before considering student loans. Look into federal student loans with lower interest rates compared to private loans.
Taxes
Why Not? Using plastic is convenient, but it comes at a cost. The IRS typically charges a processing fee for credit card payments, which can be a percentage of the total tax amount. This essentially adds another layer of expense to your tax burden.
Better Option: Pay taxes with cash, check, or electronic funds transfer to avoid additional fees.
Bail Bonds
Why Not? While some credit card companies allow bail bond payments, it’s a risky move. The emotional strain of a situation requiring a bail bond is high, and adding credit card debt to the mix can worsen your financial woes.
Better Option: Try alternative ways to secure bail funds, such as contacting a bondsman directly or seeking help from a lawyer or family member.
Gambling
Why Not? Lady Luck might smile at you from time to time, but financing your gambling habit with credit could lead to financial ruin. Gambling is inherently risky, and using credit cards adds another layer of danger. It is easy to let losses accumulate, leaving you owing a lot of money.
Better Option: If you gamble, set a strict amount beforehand and stick to it by spending cash. Leave your credit cards at home to steer clear of impulsive swipes.
Medical Bills
Why Not? Getting medical care can be a financial burden, and swiping a credit card can be tempting. However, understand your insurance coverage and billing options first. High upfront interest rates on credit cards can worsen the situation.
Better Option: Contact your insurance provider to understand your coverage and explore payment plans offered by the medical facility. Negotiating a payment plan directly can be more manageable than high-interest credit card debt.
Subscription Services
Why Not? Subscription services often seem affordable, with small monthly fees. Nevertheless, these fees can quickly accumulate, especially with multiple subscriptions. The recurring charges can strain your budget if you’re not careful.
Better Option: Track your subscriptions regularly. Evaluate if you genuinely use each service and cancel unused ones. Consider consolidating similar services offered by a single provider to save money.
In-App Purchases
Why Not? In-app purchases can be tempting, especially in mobile games. However, these small charges can rack up significant debt, particularly for unaware users or children with access to your credit card.
Better Option: Disable in-app purchases on your phone or require a password for each purchase. For children, consider using age-appropriate apps with restricted purchase options or provide them with a prepaid gift card with a set spending limit.
Large Appliances
Why Not? While credit cards might offer introductory zero-interest financing for appliances, be wary of the high interest rates that kick in after the promotional period if the balance isn’t paid in full.
Better Option: Shop around for appliances and compare prices. Consider store financing alternatives with lower interest rates or save up beforehand to make a larger down payment.
Unused Gym Memberships
Why Not? It’s great to have a gym membership to stay fit, but unused memberships are a waste of money, and credit card payments for unused memberships can lead to unnecessary debt.
Better Option: Evaluate your gym usage habits before committing to a membership. Go with pay-as-you-go options or explore free workout routines at home or outdoors.
Routine Maintenance and Repairs
Why Not? Unexpected car repairs, appliance breakdowns, or other maintenance needs can strain your budget. Putting these expenses on a credit card can lead to debt if you’re unprepared.
Better Option: Build an emergency fund to cover unexpected costs. Set aside a small amount of money each month to create a safety net for these situations and avoid reliance on credit cards.
Vacations
Why Not? Vacations are meant to be relaxing, but credit card debt incurred from the trip can linger long after you return. The high interest rates can turn a fun vacation into a financial burden.
Better Option: Plan your vacation budget well in advance. Factor in all potential costs like flights, accommodation, activities, and food. Save up for the trip to avoid relying on credit cards and enjoy your vacation stress-free.
Wedding Expenses
Why Not? Wedding expenses can add up quickly, and using a credit card can be the easy way out. However, the high cost and credit card interest can lead to significant debt after the celebration.
Better Option: Set realistic expectations and prioritize your spending. Explore creative financing options like personal loans with lower interest rates or try scaling back on certain aspects of the wedding to avoid excessive credit card use.
