Credit cards make paying for things so much easier, but the catch is that you get slapped with big interest payments later on. Just because you can pay for it with credit doesn’t mean you should. Here is a list of things that you should avoid paying for with credit:
If you owe the government money, it’s tempting to get rid of the tax bill with your credit card, but you just end up paying the bank even more money with the higher interest rates. Instead, request that the tax bill be paid in installments. You will still have to pay interest, but it’s far less than what you would owe the bank.
Medical bills are another liability that would tempt you to reach for your credit card. As with the government, you have the option of paying the medical institution in installments. It will take longer, but it will be easier on your wallet in the long run.
The interest rates on tuition fees are still lower than credit cards. If you don’t have the money to foot the bill, then speak with the school about scholarships and other forms of financial aid. There are usually many scholarships available for the taking if you do enough digging.
Many charitable organizations now make donations payable via credit card. Again, convenience must give way to caution. It’s better to donate with your own money rather than with credit. With the latter, you’ll be making two donations: one to the charity and the other to the bank.
It’s never safe to put your credit card information in the mail (even though many organizations facilitate that); the last thing you need is for that information to fall into the wrong hands. Pay online or over the phone.
There is no point in replacing one debt with another, especially if you end up paying more interest. Larger institutions don’t allow you to pay large debts like mortgages with a credit card, but some other institutions will, and this is where you should be cautious. You will be paying additional fees in the end.
When you are using your credit card, it is best to make small purchases that you can pay off at the end of the month. Your credit card can be a very useful tool, but it can work against you if you aren’t prudent. At Northwood Mortgage™ our financial advisers can help you make smart choices with regard to credit card payments and loans. Give us a call to set up a free consultation and let us see how we can help you.