Don’t Put These 5 Things On A Credit Card

Credit card reward programs have done an excellent job convincing consumers to use their credit card for everyday purchases.

Whether you need to buy gas, groceries or pay your utility bills, the safe and rewarding way to pay is always with plastic. Or so the sales pitch goes.

However, using a credit card to pay for everything is simply a bad idea.

You could be hit with high fees and even higher interest rates. Or you could expose yourself to fraud and identity theft.

Here are five things that credit cards should not be used for:

Taxes. This is typically the largest payment many people mistakenly put on a credit card. Credit card interest rates are generally between 12% and 22%, and while it’s important to pay your taxes on time, the IRS has a repayment program, which may offer lower interest rates depending on your situation.

If you can’t afford to pay your taxes in full, you should still file your tax return on time and pay as much of your bill as possible. In some instances, the IRS says borrowing money could cost less than the government’s installment plan.

Another reason to avoid the credit card tax payment is that most issuers will not provide rewards when paying taxes. Consumers might think they’re getting miles for paying their taxes, but usually they’re not.

Mortgage payments. Sometimes credit cards are used for mortgage payments, but unless you plan on paying off your credit card each month, this option should only be used as a last resort.

Constantly putting your mortgage payment on a credit card is a red flag that you’re having trouble meeting your mortgage obligation, and once you max out your credit limit, you now have two problems instead of one. Mortgage payments should be reserved for a checking or savings account.

Flea market purchases. At garage sales and flea markets, it’s better to pay in cash. Giving out your credit card info to the guy selling the antique lamp can be dangerous, and because the sale is final (meaning no refunds), a credit card cannot offer any protection.

Cash advances. Cash advances may sound enticing, but they cost a bundle. Most cash advance APR’s are upwards of 30%, with additional up-front fees.

It may look appealing to grab cash from your credit card, but it’s called a credit card for a reason. Do your best to find a different way to nab the cash you need.

Once-in-a-lifetime experiences. You might want to charge the dream vacation, the wedding or the anniversary party on a credit card, but you’re likely to overspend in a big way when credit is involved.

Budget properly and make sure the entire event is paid off even before it begins. Otherwise, the impending debt could ruin what should be a great experience.