Guest Post by J.R. Duren – Highya.com
Rewards credit cards have become extremely popular, prompting many consumers to use their plastic to pay for just about everything. It’s hard not to spend when you know that the miles or points you get every time you swipe can help pay for a vacation.
However, there are certain situations in which you’ll want to put your Visa or MasterCard away.
When to Avoid Using Credit Cards
Expensive Impulse Purchases
There are some big-ticket items that we can’t avoid buying from time to time—like when the TV breaks or our beloved Macbook dies. Items we buy impulsively, however, are risky not only because we may not love them or need them after a month or two, but because it puts us in debt.
According to the U.S. Census Bureau, the median American family earned about $55,000 after taxes in 2015, but the Bureau of Labor Statistics found they spent around $56,000 that year. Impulse purchases are a likely contributor to the trend of overspending. Not using your credit card in these situations may curb your impulse and prevent you from spending what you don’t have.
Online Casino Deposits
There is never a guarantee that you’ll win your money back when you gamble online. Couple that with the statistics showing we spend more when we use a credit card instead of cash, and you’re most likely going to spend more than you should and, in many cases, lose a good chunk of what you put on your card.
Gyms are notorious for erroneously charging monthly fees even after their members have quit. It can be easy to miss these charges when they’re on a credit card you don’t use much. However, when those charges are coming from your debit account, you’re more likely to notice them.
Big Hospital Expenses
If an unexpected trip to the hospital ends up costing you hundreds or thousands of dollars out of pocket, don’t immediately use your credit card(s) to pay the balance. You can negotiate the bill, and you may be able to set up a payment plan with the hospital that has an interest rate much lower (in some cases, 0%) than what your credit card has.
Wrapping It Up: Be Wise with Your Plastic
One of the golden rules of credit card usage is avoiding impulse buys. Smart consumers tend to make methodical decisions about what they purchase. They don’t give in to the temptation to buy a trending gadget just because it’s right in front of them at Best Buy or on Amazon. Spending $1,000 on an OLED TV might feel great in the moment, but when you see how much interest you’re paying on that purchase, the thrill dissipates.
Another trait of wise credit users? They are willing to negotiate bills for services. You’d be surprised how many business and healthcare providers are willing to lower their charges and fees if you’re able to pay cash.
Apply these two principles this year and you’re more likely to keep your discipline strong and your balances low.
BIO: J.R. Duren is a personal finance reporter at Highya.com, where he examines credit cards, credit scores and bank products. J.R. is a three-time winner at the Florida Press Club’s Excellence in Journalism contest and his advice has been featured in MSN and Fox’s money sections.