As more consumers carry around plastic instead of cash, pulling out a credit card has become second nature. Although credit cards make our lives easier, charging certain items might be an early warning sign that you’re over-leveraged. In addition, paying for some items with plastic can cause you to overspend and land you in even more debt. Here are some purchases you should refrain from placing on your credit card.
1. Student loans
Not being able to pay your monthly student loan bill is a clear sign that you need to contact your lender — fast. There are several options available to borrowers who are having difficulty with payments. Among the available repayment options are graduated repayment and income-based repayment.
Depending on the circumstances, you might also want to look into deferment or forbearance. When you choose this option, you are allowed to temporarily stop payments. As soon as you think you might have difficulty meeting your student loan obligation, call your lender.
When you pay your tax bill with a credit card, you’ll be subject to convenience fees in addition to any penalties if you happen to be paying late. Fees begin at 1.87% of the amount paid, going as high as 2.35%.
One way to avoid a huge tax bill is to make sure you’re having enough taken out of your check each pay period. Make sure to submit an updated W-4 form following life events, such as divorce or the birth of a child. If you’re having difficulty paying the IRS, another option would be to request a payment plan, so you can chip away at the debt little by little.
Next: Your bar tab
3. Bar tab
Pay for your libation in cash. When you run a bar tab you’ll be tempted to purchase more alcohol than you had anticipated. Although you might become the bar owner’s favorite customer as your tab rises, you’ll be digging yourself deeper into debt. Buying rounds of drinks for your friends might be a nice gesture, but it will cost you later. Besides, you should only be paying for necessities with credit. Tell your friends to buy their own alcohol.
Unless you’re buying groceries online, paying for a basic necessity like food with a credit card demonstrates you’re having trouble making ends meet. If you’re regularly shopping for groceries with your card, it’s time to re-evaluate your budget to get a better idea of the areas where you are overspending. You’ll find you’re either spending more than you should on unnecessary expenses, or you just have a really big appetite.
Next: Your mortgage
5. Your mortgage
You might be able to charge your mortgage payments, but according to GOBankingRates it’s probably not a good idea. Some mortgage companies won’t even allow it. But if they do you still should reconsider if you don’t plan to pay your credit card bill in full. “You’re already being charged interest on your mortgage, so paying more interest on your credit card balance is both expensive and avoidable.”
Next: A latte
6. A latte
GOBankingRates also discourages swiping your plastic for small purchases, such as your daily latte. It’s all too easy to whip out your card for a trip to the cafe. And it doesn’t hit you that you’ve been paying $5 for coffee every day until you get a massive bill at the end of the month. Plus, some stores charge a credit card fee if your purchase is less than a certain amount. So stick to cash for these indulgences. You’ll likely save some money.
Next: Medical bills
7. Medical bills
According to GOBankRates, charging your medical bills is “one of the worst things that you can do.” You don’t want to pay interest on what’s likely already a high bill. The publication recommends trying to negotiate your medical bills first because providers often are willing to work with you. Do your homework, and research the fair price of the service before you begin negotiating. Being polite and organized could save you from having to pay extra.
Next: Anything with a foreign-transaction fee
8. Anything with a foreign-transaction fee
Many cards charge a percentage of your purchases when you use them outside the country. And Money reports that isn’t worth paying when there are travel cards that omit the fee. Money and NerdWallet even created a list of the best travel cards. If you travel a lot it’s definitely worth it to sign up for one.
Additional reporting by Mary Daly.