As credit becomes more available to the masses again, it’s good to understand the places that you should keep that plastic in your pocket. For the most part, as long as you can pay back the amount quickly, credit cards can help you purchase something safely and rewardingly. However there are certain instances that we come in contact with throughout our lives those credit cards is not a good choice.
Cold Calls – We have all had them, the local Police department or charity calls and asks for a donation. It could even be a vendor of some sort that tries to sell you something. Before handing over your personal information, do your research. Ask them for a number to call back. Ask them for the company name and tell them you are going to do your own research and call them back. Make sure they are who they say they are. Check out this page from the FTC: http://www.ftc.gov/bcp/edu/microsites/charityfraud/
Mom-n-Pop Vendors – We all love going to the local flea market or craft show, but be careful when handing a complete stranger your credit card. More than likely they are not there to scam you, but these days you have to be careful.
Normal (Snail ) Mail – Yes, people will steal your mail from your mailbox. WHAT HAS THIS WORLD COME TOO? Most utility companies, cable & internet companies, etc. allow you to pay your bill online if you need to use your credit card. Or, if you are afraid of that, call them and give it to them over the phone. Want to order that magazine this holiday season, online is the place for that too.
Medical Bills – Did you know that major medical bills are negotiable? If you rush to pay the bill at the retail price, you are leaving money on the table.
“You should never pay for a hospital stay or full-charge medical bills with a credit card,” says Carmen Wong Ulrich, personal finance writer and author of The Real Cost of Living.
US Government (Taxes) – Using your credit card to pay your taxes comes with a fee of 2%. If you owe thousands of dollars in taxes, that could get really expensive. You should talk to the IRS and see if you can negotiate a lower fee and then ask for low monthly payments.
Vehicle Purchase – You might have the credit limit and you might have an Intro APR that is lower than the bank or dealer could give you, but would you be able to pay the loan off before the intro rate expires or the bank increases your APR? Most credit cards carry a “variable” APR that allows the bank to increase your APR if you give them cause. That could get messy. More than likely, if you have good credit you could probably get a 0% rate for 60 to 72 months anyway. No bank will give you that.
Shopping Spree – Yes, going out and spending a bunch of money during the holiday season on your credit card is easy and helps with the blow to the wallet. But remember that things arise when you least expect them too, and if your credit card is maxed out, then you are stuck with what high rate you can get from the manufacturer or company.
Using your credit card for purchases can be extremely rewarding, especially if you have a rewards credit cards, airline credit card, or cash back credit card, but remember to think things out and be smart.