10 Things You Should Never, Ever, Put on Credit

Avoid financial pitfalls by steering clear of these expenses on your credit card.

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Updated July 18, 2024
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Credit cards can be a convenient financial tool, but they can also lead to significant debt if not used wisely. 

While it might be tempting to charge various expenses to your credit card, certain items should be avoided to prevent throwing money away.

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Taxes

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Using a credit card to pay your taxes can seem like a quick solution, but it usually comes with high processing fees. These fees can range from 1.87% to 3.93% of your payment amount, which can add up quickly, especially if you owe a large sum.

Plus, if you can’t crush your credit card balance immediately, you’ll accrue interest, making your tax bill even more expensive.

Medical bills

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When faced with medical bills, it might seem easier to charge them to your credit card. However, this can be a costly mistake. Medical providers often offer payment plans with little to no interest, which are far more manageable than high-interest credit card debt.

Negotiating your medical bills directly with the provider can also lead to significant reductions in what you owe.

Cash withdrawals

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Taking out cash advances on your credit card is one of the most expensive ways to access money. Cash advances typically come with higher interest rates than regular purchases and often include an additional cash advance fee.

Interest on cash advances starts accruing immediately, without the usual grace period, making this an expensive option.

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Any large purchase that will max out your credit limit

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Maxing out your credit limit can negatively impact your credit score. High credit utilization ratios can signal to lenders that you’re overextended and may have difficulty repaying your debts. 

It’s better to save for large purchases or explore other financing options that won’t harm your credit score.

Your monthly mortgage or rent payment

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Using a credit card to pay your mortgage or rent can quickly lead to unmanageable debt. 

These payments are usually your largest monthly expenses, and carrying a balance from month to month can result in substantial interest charges, not to mention typical transaction fees ranging from 2% to 3%.

Look for other ways to manage these payments, such as direct transfers or electronic checks.

Utilities

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Paying utility bills with a credit card can lead to a cycle of debt if you can’t pay off the balance each month. Utilities are recurring expenses, and carrying a balance can quickly accumulate interest, increasing your financial burden.

Some utility providers also charge processing fees if you pay your bill using a credit card. Setting up automatic payments directly from your bank account can help you avoid these financial pitfalls.

Online betting

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Gambling with credit cards can lead to severe financial problems. Gambling transactions can result in significant debt if not managed responsibly. The addictive nature of gambling combined with easy access to credit can create a dangerous financial situation.

Tuition

Pixel-Shot/Adobe student loan concept

While you might consider using a credit card to pay for tuition, especially if you would earn rewards points, the high interest rates and added payment processing fees can quickly outweigh the benefits. 

Student loans usually offer lower interest rates and more flexible repayment options, making them a better choice for financing education.

Peer-to-peer (P2P) payments

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Using credit cards for peer-to-peer payments through services like Zelle, Venmo, or Cash App can incur transaction fees of around 3%. 

These fees can add up, especially for large or frequent transfers. It’s more cost-effective to use bank transfers or debit cards for P2P payments to avoid these extra charges.

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Impulse expenses

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Charging impulsive purchases on your credit card, even if they’re small, can lead to unnecessary debt. 

Items bought on impulse are often non-essential and can quickly accumulate, leading to a larger balance that might be difficult to pay off. Smart shoppers budget for these expenses or use a debit card to keep spending in check.

Bottom line

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Before charging any expense to your best credit cards, consider the long-term implications and explore alternative payment methods that can help you stay financially healthy.

Reflect on your current credit habits: Are there expenses you should start handling differently to avoid falling into a debt trap?

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Author Details

Adam Palasciano

Adam Palasciano is a personal finance-obsessed and money-savvy individual who loves to hash out content on all things saving money. He specializes in writing millennial-friendly personal finance content, covering topics ranging from trending financial news, debt, credit cards, cryptocurrency, and more.