Interest charge

3 things I refuse to charge on a credit card

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As someone who has used credit cards for many years, I have a pretty decent history of earning cash back and rewards points that have helped me cover other bills or give my family fun activities. But while it’s often beneficial to use a credit card, in some cases I know it’s better to pay cash. Here are a few things I won’t use a credit card for.

1. Taxes

Most people I know get a refund during tax time. But when you’re self-employed like me, it can be very difficult to accurately estimate your tax bill. As such, most years I end up owing money to the IRS when I file my taxes. And although the IRS gives you the option of paying a tax bill with a credit card, that’s an option I don’t like to take.

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While it would be nice to get some money back from my tax bill, the IRS charges a fee for using a credit card for this purpose. And in the past, I’ve found that the amount of cashback I could collect was less than the amount of fees I was charged. As such, the numbers just don’t work.

2. Activities for my children (when a supplement applies)

My children are enrolled in a host of activities, from summer camps to sports. Some of these activities allow you to use a credit card to register without charging a fee. But some charge a higher processing fee than the cashback amount I’m supposed to collect. In these cases, I will pay for these activities via Venmo, check or any other free option available.

3. Purchases that I cannot pay for in full

I happen to love credit cards. But I hate the thought of having to pay interest on any purchase I make. As such, I will not charge anything to a credit card that I cannot afford to pay in full by the time my bill is due. If I want to take a vacation or upgrade my electronics, I’ll save up for those purchases up front. Once I have the money, I could then use my credit card for rewards points or cash back — why not? But first I’ll make sure the money is in the bank.

Be careful when using your credit cards

Scoring credit card rewards is a good thing. But before you swipe a credit card, make sure you won’t have to pay a fee to use it.

Many companies these days pass credit card processing fees on to consumers in an effort to ward off inflation and help recoup some of their costs. So before whipping out your credit card to pay for a clothing purchase or a meal, read the fine print.

And of course, do your best to only use your credit cards for purchases that you can pay for immediately (i.e. when your bill is due). Any interest you accrue on a credit card balance is likely to cancel out the cash back you get – and more.

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