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Getting a brand new credit card in the mail may raise your excitement level. If you don’t have a prior credit history, this could be your stepping stone to good credit. Before you make a list of things to purchase with your credit card, understand that credit shouldn’t be used for everything.
Granted, credit cards are helpful in emergencies, and using credit to pay a bill when you’re cash-strapped can keep your account current. But if you want to manage your credit wisely, know what and what not to buy with your credit card.
Things Not to Buy With Your Credit Card…..
- Clothes. Regardless of the particular sale or how many items you can get for your money, buying clothes with a credit card can open the door to terrible spending habits. If you have the money to pay off the charges at the end of the month, buying clothes on credit isn’t a big deal – it’s actually an excellent way to rack up reward points. But if you won’t have the money this month – or the next – put your credit card away and save up for purchases.
- Groceries. If you’re low on cash, you might use a credit card to complete your weekly grocery shopping. This is convenient, however, you risk overbuying and incurring unnecessary debt. There is a greater temptation for impulse buying, in which you buy items that you normally wouldn’t. Rather than whip out the credit card, make adjustments to your budget and free up cash.
- A new or used car. Believe it or not, but some people actually purchase their cars with a credit card. If you have an unbelievably high credit limit, plus a super low finance rate, you might actually save money. And if you commit to consistent monthly payments, you might pay off this debt in three or four years – just like a bank loan. Even so, an expensive purchase on a credit card is always risky. Your credit card company might raise your interest rate, which increases your minimum payment. Plus, the higher your credit card debt, the lower your FICO score.
Things to Buy With Your Credit Card…..
- Electronics. If you’re in the market for a computer, a flatscreen television or any other electronic, make this purchase with your credit card. Many credit card companies, such as American Express and Discover, offer complimentary extended warranties on electronic purchases made with the credit card. If the item breaks after the manufacturer’s warranty expires, this extended warranty saves you money on repairs.
- Travel plans. Use your credit card to make travel plans and you may receive complimentary travel insurance. Certain credit cards include features such as reimbursement for trip cancellation, benefits for an accidental death while on vacation, emergency assistance while traveling, as well as concierge services. Plus, some credit cards reward cardholders with 2% cash back or bonus miles for travel purchases. Contact your credit card issuer to see if you qualify for these perks.
- Online purchases. If you’re a frequent online shopper, make purchases with your credit card instead of your debit card. Credit cards provide bonus protection. You can receive reimbursement if an item is lost or stolen before it arrives at your home. And if the seller ships a defective item, credit cards offer more protection than a debit card.