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Do Not Pay For these Items with a Credit Card, Say Financial Advisors

Going cashless while we shop is probably one of the most convenient things that technology has brought to us. We can finally skip skimming through our purses looking for bills and coins. It can be very convenient and easy, that’s why most people prefer it.

Talk to people who has an existing credit card account for some advice

Going cashless can be easy but it has also its many pitfalls. One of which is that it totally disrupts our finances and budgeting. We tend to get overboard especially when there are ‘SALE’ signs flashing at us. So before going out and swiping that credit card, read this article first to know the top things we should not pay for using our cards.

Mortgage payments

Most of us experience being low in cash and that’s why we are more susceptible to credit card temptations. There might be times that we have considered using our precious cards to pay off our mortgage. This is a bad idea for two main reasons. First, not all mortgage companies allow people to pay through credit card. If they do, that means that they most probably will charge the users with a convenience fee. Now comes the second reason. The convenience fee, monthly interest on mortgage, and the credit interest will all combine, creating a huge chunk of debt. This can also affect our credit scores in the long run.

Business startup expenses

Even if profits are low, don’t turn to your credit card

Most often than not, starting a business can take a few years before it finally becomes independent and profitable. Though we remain hopeful, it’s not an assurance that all the business ventures will blossom. If it doesn’t work out, that only means we are paying for the interests of a failed business and we might not be able to pay back all those debts before the interest rates blow up. There are many alternatives to funding a small business startup and relying on credit cards is surely not one of them.

College

An average cost of college in a private school is at $34,000 per semester

We all know by now that college is pretty expensive but that would still depend on the University itself. Students who are sending themselves to college will surely know the burden of how expensive education really is with all it’s auxiliary costs. Paying college tuition through our credit cards can be good if we have a steady paycheck that we can rely on. If there is none, it’s best to reconsider other options. Just like mortgage companies, Universities can charge students with two to three percent convenience fee.

 Indulgence

What a great way to start the day with that perfect cup of latte and freshly warmed bagels. What’s even more exciting is when we can totally get away with it just by using our credit cards. What is a $2-dollar coffee, right? But this $2 dollar when spent on a daily basis can pile up and give us more credit that we can possibly think of. This doesn’t end with coffee, it includes things like shopping, dining out, and going to the movies. What’s worse is that when we use our cards to pay off our wants, we end up sacrificing the things we actually need to pay for. We can disrupt our budgeting plan and we find ourselves regretting those purchases when the monthly bank statement arrives.

Cash Advances

When we are short of cash, getting a cash advance seems like a good idea to fix things. A cash advance is when the holder borrows money against the account of the credit card. This doing can lead us to paying higher fees and probably high interest rates, too.
There are also times where cash advance is really necessary but these must be left to emergency purposes only. We don’t want to subject ourselves to paying more interest than we probably are now paying.

Bottom line:

Just like all the things that exist in the world, credit cards can be a good financial supplement if used properly. Before applying for a card, we must do serious research on which card to choose that best suits our needs. It’s also best to decide for ourselves if we can take on that kind of financial commitment where we have to spend and pay on a monthly basis.

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