Consumer Credit Counseling Service News Articles

As we move closer and closer to a cashless society, consumers can use credit cards to pay for nearly everything, everywhere these days. BUT…that doesn’t mean you should.

Outstanding card debt has now hit its highest point ever, surpassing the $1 trillion mark in 2017 (per the Federal Reserve). Yes, that’s with a “T”. No wonder 86% of Americans who have or had credit card debt said they regret it, according to a recent report by NerdWallet.

NEVER put these 5 expenses on credit and why!

1. TAXES

It can be tempting to put an unexpected tax bill from Uncle Sam on Visa or Mastercard. You feel like “I’ll get it over with and worry about it later.” NOT SO FAST. The Internal Revenue Service will charge a processing fee of up to 2 percent AND if you use a third-party filing software, you’ll pay even more. Why pay interest charges on taxes already owed? Instead, consider asking the IRS for a payment plan. (Yes, these exist.) The government interest rate is usually only around 0.5 percent.

2. COLLEGE TUITION

Don’t ever pay for education with credit. Student loan interest rates are almost always lower. In addition, large charges such as tuition fees will up your credit utilization ratio, which can result in a hit to your credit score. AND…colleges and universities often add a processing fee of up to 3 percent for card payments.

3. MORTGAGE PAYMENTS

Most home-loan lenders won’t let you pay your mortgage by credit card but there are plenty of third parties who will gladly help with that – for a huge fee! And if you don’t pay off your credit card balance at the end of the month, you’ll compound your mortgage debt and eat up your available credit – AGAIN impacting credit scores. Why pay interest on interest?? Speak to your mortgage servicer if you are having trouble with your payments. There are other options.

4. BIG-TICKET ITEMS YOUR CAN’T REALLY AFFORD

Here’s the No. 1 RULE for credit card usage: IF YOU CAN’T PAY IT OFF IN FULL BY THE END OF THE MONTH, DON’T PUT IT ON PLASTIC. Only open a new account offering 0% intro rate for a set period to pay for such a purchase after you figure out how many months it will take you to pay it off at zero interest and set up those automatic payments. And don’t forget, the hard inquiry to open the new account will impact your credit score also.

5. MEDICAL BILLS

Health care costs are soaring and show no signs of slowing down. If you need treatment you cannot actually afford, there are other options than credit cards for paying off balances. Many medical providers will offer low or no-interest payment plans, or will negotiate for lower bills altogether.

Paper or plastic?? Think twice.