Want to know the single most surefire trick to help you save money and stay on top of your finances? The key to managing your credit is picking where and when to use your credit cards.
Some credit experts recommend limiting your purchases to only expenses that you can immediately pay off. While there may be something to this argument, the biggest credit pitfalls usually involve high interest expenses.
With those factors in mind, here are ten things you should never, ever charge.
1. Traffic tickets
If you’re the unlucky recipient of a traffic ticket (and face it: it happens to the best of us), do whatever it takes to pay it off without using your credit card. Charging your ticket just costs you more money on top of the ticket fee and any penalty from your insurer.
2. Lottery tickets
Never buy a lottery ticket with your credit card. Even if you win a small amount, the interest on your purchase may exceed your winnings. Buying a lottery card with cash for fun is fine, if you want. Charging a ticket out of desperation is foolish.
3. Monthly utility bills
Paying a bill with a credit card only puts you further into debt and ultimately creates more problems than it solves. If you cannot pay your bills without using a credit card, it may be time to ask for help from a professional credit counselor. Such a counselor can help you clean up any financial problems you find yourself in.
4. Mortgage payments
Again, paying a bill with a credit card only puts you deeper in the hole, and can make things much worse. Consider asking for help if you need it.
5. Medical bills
Sometimes medical bills just happen, and putting them on the credit card may feel like the best choice. Instead, ask the doctor’s office or hospital to set up a payment plan. You’ll probably get a better interest rate and a payment, and you’ll avoid racking up more credit card debt.
6. College tuition
Education is worth investing in and even going into debt for, but not on a credit card. Explore the many financial aid opportunities, including work-study, grants, scholarships and government-guaranteed loans.
7. Wedding expenses
A great wedding will give you many wonderful memories. However, if it also gives you a big bill at the beginning of your marriage, it’s simply not worth it. Explore handmade wedding decorations and other ways to lower costs.
Also Read: Everything Newlyweds Should Know about Debt
8. Charitable donations
Donate only the amount you want to donate, either with cash or using a check or debit card. Never pay interest on your charitable giving.
9. Vacation expenses
If your vacation puts you deep in debt, how relaxing is it, really? Take the vacation you can afford without going into debt. Consider local day trips or finding great things to do at home during a staycation.
Also Read: Spring Break or Spring ‘Broke’?
10. Anything banks consider a cash advance
Cash advances are short-term loans and should usually be avoided if possible. Unfortunately, you may end up taking out a cash advance without realizing it. Card issuers consider money order payments, bail bonds and gambling purchases (such as chips at a casino) as cash advances, and apply interest rates accordingly.
The key to maintaining good credit is knowing when and where to use your credit cards. Though a credit card can be a useful tool in bolstering your credit, it can also be dangerous when used carelessly.