Credit cards are very convenient because they are more convenient than carrying cash. One can just swipe a credit card to make almost any payment, anytime and at any place around the world. However, one should be careful about using credit cards as spending too much will lead to high credit card debts.
And paying off the credit cards can become a significant challenge at times. The interest rate on the debt makes the repayment amount even higher. And missing these debt repayments will further worsen one's financial situation.
Here are three expenses one should never put on a credit card:
Startup costs: Entrepreneurship is booming these days and more and more are coming up with startups. Small business owners often put their startup expenses on their credit cards. But in initial years many startups do not make profits, which makes it difficult to repay the credit card debts.
Small purchases: We often use credit cards for making small purchases at grocery shops to avail small benefits such as reward points and cash back offers. But according to research conducted by Bankingsense, the cost of credit card debts an average consumer faces for using credit cards at grocery shops is higher than the rewards offered by the shops.
Medical expense: Many modern hospitals accept credit card payments these days which has made it tempting for us to pay our medical bills with a few swipes. The amount one puts on his or her credit card to pay off the medical bills end up costing much more than what the doctor or hospital would charge. Interest and possible late fees can end up increasing one's medical expenses by a significant amount.
So what expense should one put on their credit cards?
According to wealth advisers, there are certain expenses where the perks from credit card payments exceed the costs. Credit card companies provide attractive travel perks such as free travel insurance and travel miles if flight tickets and hotel bookings are paid through their cards. Some credit card providers offer lucrative discounts and extended warranties if home appliances are bought through their card. Other expenses such as online purchases also have better fraud protection if credit cards are used.