5 purchases you should never put on your credit card

In today’s digital age, credit cards have become an essential part of our financial lives. They offer convenience, rewards, and security. However, not all expenses are suitable for credit card payments. Personal finance experts advise against using your card for certain transactions to avoid accumulating unnecessary debt. Let’s explore which expenses you should reconsider:

1. Rent or Mortgage Payments:

  • Why? Many landlords and mortgage companies charge convenience fees for credit card payments. These fees can add up significantly over time.
  • Alternative: Opt for direct bank transfers or checks to pay your rent or mortgage.

2. Medical Bills:

  • Why? Medical providers often charge high processing fees for credit card payments. Plus, medical debt can quickly escalate.
  • Alternative: Set up a payment plan directly with the provider or use a health savings account (HSA) if available.

3. Taxes:

  • Why? The IRS imposes hefty fees for credit card tax payments. These fees can outweigh any rewards you might earn.
  • Alternative: Pay your taxes directly from your bank account or use an IRS-approved payment method.

4. Student Loans:

  • Why? Most student loan servicers don’t accept credit card payments. Even if they do, the fees can be substantial.
  • Alternative: Stick to regular loan payments through your bank account.

5. Gambling and Cash Advances:

  • Why? These transactions often incur high interest rates and fees. They can quickly spiral into unmanageable debt.
  • Alternative: Avoid gambling and seek other sources of emergency cash.

Remember, responsible credit card usage involves paying off your balance in full each month. By avoiding unnecessary credit card charges, you can maintain financial stability and stay out of debt.

Is it worth it to pay rent with credit card ?

Paying rent with a credit card can be a convenient option, especially if you’re in a situation where you need a bit more time to cover your rent or you want to earn rewards on your credit card. However, it’s important to consider a few factors before deciding to do so:

  1. Processing Fees: Many landlords or rent payment services charge a fee for credit card transactions, which can range from 2.95% to 3%1. This fee can add a significant amount to your monthly rent, so you’ll need to decide if the convenience or rewards are worth the extra cost.
  1. Credit Card Rewards: Some credit cards offer rewards that can offset the cost of processing fees, such as cashback, miles, or points. For example, the Bilt World Elite Mastercard® allows you to earn rewards on rent payments without a processing fee, as long as you pay through the card’s app2
  2. Financial Management: If you’re not able to pay off your credit card balance in full each month, the interest charges could quickly negate any rewards earned and potentially lead to debt.
  3. Credit Score Impact: Using a credit card to pay rent can affect your credit utilization ratio, which is a factor in your credit score. High utilization can negatively impact your score.
  4. Emergency Situations: If you’re between paychecks and the processing fee is lower than your landlord’s late fee, paying rent with a credit card could be a temporary solution to avoid late fees3.

In summary, while paying rent with a credit card can offer benefits like convenience and rewards, it’s crucial to weigh these against the potential costs and impact on your financial health. Always ensure that you can manage the additional fees and pay off the balance to avoid interest charges.

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