What Not To Buy – With Credit Cards

By: | October 7, 2020 | Tags: ,
UNDERSTANDING CREDIT CARDS NOTE TAKING GUIDE

Here is your Understanding Credit Cards Note Taking Guide.

This post presents the advantages and disadvantages of using credit cards.

Clearly, there are times when using credit cards makes sense. For instance, not all companies accept debit cards, so using a credit card is more convenient especially if you’re trying to make an online purchase. Often, debit cards are not accepted online.

There are other purchase decisions that result in disaster when you use a credit card.

Do you know the difference? By the time you’re done reading this Understanding Credit Card Note Taking Guide, you will.

Are you ready for your Understanding Credit Cards Note Taking Guide?

What Not to Buy — With Credit Cards

Here are some statistics that may shock you: The average U.S. household has a bit over $16,000 in credit card debt.

While that might seem like a lot, it all depends on how large of a balance you’re carrying each month, and what you’re actually buying with the cards. 

Here’s some advice on what not to buy with credit cards:

Why Everything You Think You Know About Credit Cards Is Probably Wrong

There’s this idea held about credit cards in popular culture that they’re what you’re supposed to use for frivolous purchases. But this is actually backwards.

Credit cards can be a useful tool in your financial arsenal. They allow you to buy goods in-person or online with absolute ease. Plus, they can offer some great perks such as cashback or airline miles. Doesn’t it then make sense to use credit cards at every available opportunity?

The problem with this thinking is it becomes easy to obscure the line between want and need. There are a couple main situations where credit cards are generally a good idea.

Credit cards work the best when you plan to pay off the entire balance each month. In this scenario, you’re using the credit card as you would a debit card, but are getting a bonus from the bank for doing so.  

Not everyone is using a credit card this way though. Many people are attracted to credit cards because they can use them to get things they otherwise wouldn’t be able to afford. While this is fine in some instances, it can get dangerous if you’re doing it all the time.

The more debt you have on credit cards, the harder it becomes to pay off as the interest rates keep raising the balance even if you’re not spending. 

People who are over their heads in credit card bills can consider the benefits of a debt relief program. Working with an agency like Freedom Debt Relief can put you on the path toward eliminating your credit card debt. 

First, though, let’s look at what you should and shouldn’t be putting on your credit cards.

Examples of Good Credit Card Purchases

  • Rental Cars: This makes perfect sense to purchase with credit. For starters, a lot of rental car companies won’t even let you use cash. With a credit card, your deposit doesn’t need to come out of your checking account, but can just be drawn from your line of credit and returned when you bring back the car. Some card providers also have extra forms of protection in case there’s an accident. 
  • Travel and Airfare: There’s an obvious benefit to the convenience of booking your trip with a credit card. But the benefits go far beyond that. Many cards offer special deals on travel accommodations, which can save you a noticeable amount on the total cost of the trip. Furthermore, your card issuer might have some kind of insurance or protection if your trip is canceled for any reason. 

Examples of Bad Credit Card Purchases 

  • Medical Bills: This is one of the trickiest expenses to deal with, as it’s necessary and expensive. Try to avoid putting medical bills on a credit card at all costs. There’s a reason why medical expenses are cited as the top single cause for individual bankruptcies. Medical bills are costly. Combined with the high-interest rates of a credit card, this can set your finances back in a major way.  
  • Investments: No matter if it’s money for starting a business or buying stocks, you don’t want to mess around with combining investments and your credit cards. Even the most skilled investment professionals would balk at having to beat credit card interest rates in order to make a return. Getting yourself out of debt is an investment in its own way. Work on this instead of trying to make money by loading up your credit cards. 
  • Anything You Can’t Buy Otherwise: As a rule of thumb, you should just avoid using credit cards if it means you’re stretching out to buy something you otherwise couldn’t. 

Wrapping Up: Your Understanding Credit Cards Note Taking Guide

Credit cards can be super useful and convenient when used for the right things. But they can also land you in a world of inescapable debt. Strike a balance by avoiding using your credit card for these bad types of purchases. 

Takeaways:

Many occasions call for a credit card purchase instead of putting a purchase on your debit cards.

However, not all credit card purchases are good ones.

This post explained the difference between good and bad credit card purchases.

Readers, please share so credit card users discover this Understanding Credit Cards Note Taking Guide.

I look forward to your views in the comments section. Can you suggest additional information that should go in an Understanding Credit Cards Note Taking Guide?

Author: Nancy Smith

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