Updated July 2, 2014

What to Buy (and Not Buy) on Your Credit Card

5 Things You Should Never Charge on Your Credit Card Plus 5 Things You Should
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Swiping your credit card is easy. Rare is a store that insists on cash only. But just because it's easy doesn't mean you should always do it. There are times, CreditDonkey.com advises, when you should keep your card in its home slot in your wallet and pull out cash instead. Similarly, there are other instances where you should only pay with a credit card so that you can take advantage of the protections and convenience it provides. Before you spend your next dime, take a look at our list.

5 Things You Should Charge on Your Credit Card

1. Charge It! Big-ticket Items

The first item on the list of the top 5 to charge includes big-ticket items, like electronics and appliances. An expensive item may translate into more rewards points if you use the right credit card, but that perk is not only reason we’re suggesting you always pay for high-priced buys on your credit card.

Sometimes, by using a credit card to buy a large-ticket item, you are in effect getting an extended warranty. The extended warranty is probably something your salesperson tried to get you to buy directly from them, but you may not need to because some cards may provide this perk at no additional cost. The plans vary between companies, and there’s no set standard on what’s covered or how long the warranty will last, but it may help you if you have to repair or replace a damaged item.

Using a credit card may also give you some price protection. This means if you spend a large amount of money on a new refrigerator, for example, and it goes on sale somewhere else, your credit card company may refund the difference between the two prices directly to you. Check with your credit card company before you buy to see what’s covered under your policy.

2. Charge It! Contractors

Next on our pro-charge list has to do with home contractors and other service providers. Some contractors won’t take credit cards, but an increasing number do. And, of course, it never hurts to ask. Using a credit card to pay your contractors or service bill gives you some leverage if you have to dispute the quality of work they have provided.

For instance, if you hire painters to paint the outside of your home and they either never complete the job or do a shoddy job, you have options. With a credit card, you can more easily stop or withhold payment until you work out the dispute with the other party.

3. Charge It! Vacations

If you’re planning a big vacation, using a credit card can also be a great deal. And we’re not just talking about airline miles.

We’re talking about protecting the expense you’ve put into your travel. Some credit cards offer trip insurance, cancellation service, and rental car insurance at no additional cost. Some also include medical and emergency services. So you can ignore your travel agent’s and rental car company’s pleas to buy their insurance. Just be sure to check with your credit card company to see what’s covered.

4. Charge It! Monthly Expenses

The next thing you’ll want to consider charging has to do with recurring monthly expenses like gym memberships and subscriptions. If you stop going or find you are no longer using a service, you’ll have an easier time disputing the charge with your credit company if a problem arises. That’s why it’s usually better to connect such payments to your credit card rather than to your bank account. On the other hand, you may not want to allow such recurring charges because they are easy to forget or not notice.

5. Charge It! Online Purchases

Finally, rounding out the top five items to charge involves online purchases. It makes sense that you would charge something you buy online, but many people use their debit cards to help curb overspending. We understand the sentiment, but you may not get the same protection with a debit card as you do with a credit card.

Typically, credit cards protect you in the case of identity theft or fraud. With a credit card, it’s fairly easy to dispute and reverse the charges. That’s not always the case with debit cards. In addition, with credit cards, you don’t have to worry about someone getting into your bank account and wiping out your funds.

5 Things You Shouldn’t Charge to a Credit Card

1. Don’t Charge It! College Tuition

This brings us to the top five things you most likely don’t want to buy with your credit card. The first one is a big expense for parents and students – college tuition. Some colleges and universities allow you to charge a semester on your credit card, but that’s not the best idea. Some schools will make you pay more just for the convenience. When you’re talking about thousands of dollars, even just a percent or two on top of the payment can really add up.

If you’re worried about paying tuition, look at the other options out there. A low-interest student loan is likely to make more financial sense to you and your family in the end.

2. Don’t Charge It! Taxes

Next on the list is paying off your state and federal income taxes. When tax time comes and you owe money, you need to come up with a plan fast. Grabbing that credit card may seem like a good idea, but it may actually compound your financial troubles later on.

Instead, if you do owe an amount you can’t pay by the April deadline, then request a payment plan from the IRS. You’ll pay for this grace period, but at least you won’t have to worry about credit card interest charges. It’s too late for this year’s tax bill, but consider adjusting your withholdings with your employer if you always seem to be in the red at tax time.

3. Don’t Charge It! Gambling

If you feel like you’re getting in over your head when it comes to your financial situation, you probably are. Taking a real gamble with your finances though, is a lose/lose scenario. Most states, and even some credit card companies, have laws and rules in place when it comes to gambling and playing the lottery. Amazingly, some still don't.

To get around these restrictions, gamblers will take out cash advances from their credit cards, which is a very bad idea. You’ll likely pay a fee plus an exorbitant APR if you can’t pay it off right away. It’s a double-gamble that is not worth the fleeting thrill of gambling.

4. Don’t Charge It! Medical Procedures

If you have any upcoming medical expenses, you may also be looking at a large bill. Just as with everything else, though, you need to weigh the benefits when it comes to your payment plan.

It may sound like a good idea to pay off that $1,000 bill in one lump sum. After all, you don’t have to worry about harassing phone calls and bills from providers trying to collect. Obviously, we’re not advocating that you don’t pay your bill, but we are saying there may be a better way to do it than using a credit card.

Instead of charging the bill, ask to set up a monthly payment plan with your medical provider. As long as they get a guarantee they’ll be paid, providers are often happy to oblige this request. And they tend to be more lenient with turnaround times than credit card companies; they usually wont’ charge you interest or a fee.

5. Don’t Charge it! Mortgage or Car Payments

The final items on the list of things you don’t want to charge are mortgages and car payments. Obviously, these are big payments, but if you’re paying by credit, you could be setting yourself up for even bigger problems down the road.

A number of auto and mortgage lenders don’t even take credit cards, but some third-party companies will do it for a hefty fee. Don’t put yourself further into debt trying to get out of debt. Instead, look for other options like refinancing, which can truly help you make your payments each month.

Credit cards come with plenty of perks if you use them right, but you could be doing yourself a disservice if your credit card puts you in additional debt. Instead, be smart with your money, and make sure you always get the best deal for your buck.

Lori D is a contributing writer at CreditDonkey, a credit card comparison and reviews website. Write to Lori D at lori@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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Comments about What to Buy (and Not Buy) on Your Credit Card
  • Jim from Minnesota
    on February 2014 said:

    Good insight here but requires a lot of discipline. One critical overarching principle is missing. You should never purchase anything with a credit card if you can’t pay it off. If you don’t have cash in your bank account to pay for that vacation or big ticket item then don’t buy it!! You can’t afford it!! Work on changing behavior first and say “no” or “we can wait”. This will be the best thing for you in the long run.

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