Unless you can pay your credit card bill as soon as it arrives, there are certain expenses you should never charge if you want to preserve your fiscal health and well-being. Charging just about everything makes good sense for those who have a lot of money in the bank. After all, it’s convenient to use a credit card, there are numerous rewards — from cash back to frequent flyer miles — and there are many consumer protections when you use plastic that you don’t get when you pay with cash. But if you don’t have the money in the bank to pay 100% of the credit card bill the day it lands in your mailbox, you need to use your credit card with more discretion. CreditCards.com advises cash-strapped consumers to avoid using credit cards at all costs when it comes to these five big purchases:
- A big tax bill
There is nothing more nerve-wracking than receiving a bill from the Internal Revenue Service, but don’t reach for your credit card just so you can quickly pay it off. Such bills tend to be very large. In addition, paying the IRS with a credit card will incur a processing fee that could be as high as 2% or more of the amount you charge. What should you do? Contact the IRS and set up a payment plan. You will be pleasantly surprised to find out that the IRS charges less interest than just about anyone else at less than 5%.
- A gambling spree
Gambling is entertainment, not a way to make money. Using a credit card cash advance to finance the slot machines is financially stupid. Cash advances incur a far higher interest rate–as high as 30% APR. What should you do? Set aside a specific amount for gambling. When it’s gone, it’s gone. And if you suspect a gambling problem, do seek counseling or other help before you rack up a debt that will sink you. It may not have the same thrill, but you can play poker online without betting money.
- College tuition
Even though many colleges allow you to pay their hefty tuition, room and board bills with a credit card, don’t do it unless you know you can pay it off in full within three months. What should you do? Examine all the options for student financial aid, including grants, scholarships, low-interest student loans and part-time jobs. If it’s still too expensive, go to a less costly university or a community college.
- Plastic surgery
Putting thousands of dollars on your credit card for a face lift or a D-cup could lead to financial ruin. All vanity purchases should be paid for in cash. What should you do? Save for it! This is a luxury, not a necessity. And if you just can’t save that much money, then you shouldn’t have the plastic surgery.
- A lavish wedding
Big weddings can cost big bucks — $50,000 or more. Charging this on a credit card could seriously debilitate newlyweds, who may find their most common discussions are arguments about money. And if it’s the parents who foot the bill, this could put a serious dent into their retirement plans. Either way, big weddings can lead to big stress. What should you do? Scale back. Think meaningful and spiritual instead of material.