Access to a credit card can be both a good and bad thing. On the plus side, you don't have to immediately part with cash to make a purchase. Conversely, this makes it much easier to spend money on something you can't afford.
There are definitely times when it makes sense to use a credit card, such as when buying groceries or filling up your car with gas.
There are also times when you should think twice before pulling out your plastic. Here are five things you should never put on your credit card:
- Taxes. As tempting as it may be, you don't want to go down this path. In addition to an Internal Revenue Service merchant processing fee, you will also be hit with interest charges if you carry your balance from month to month.
- College tuition. Generally speaking, the interest on a student loan is almost always lower than a credit card.
- Mortgage payments. While your lender may not allow this, there are third party companies that can step in and facilitate the process. Unfortunately, these lenders charge a hefty fee for their service.
- Items you can't afford. Just because you have enough credit to make a purchase doesn't mean you should do so. If you can't pay it off when the balance comes due, continue to save for the purchase.
- Investments. Even if it seems like a "can't miss" opportunity, you should never use a credit card to fund an investment.
If you find yourself buried in credit card debt with no way out, it may be time to learn more about bankruptcy.