3 things I would never pay with a credit card

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It does not pay to charge certain things.


Key points

  • I do almost all of my shopping with a credit card.
  • There are, however, a limited number of things that I would never charge for.
  • This includes stock purchases and my mortgage payments.

I have a credit card with a great rewards program and I charge almost all of my purchases to this card to maximize my cash back.

But while I swipe the card to pay for everything from groceries to my electric bill, there are three things I would absolutely never charge. Here is what they are.

1. Shares

I invest regularly, often buying stocks and ETFs. But I never pay for stocks with a credit card and I never will. There are several reasons for this.

First, most brokerages don’t allow you to use a card to buy stocks. And in situations where it is possible, expensive fees are charged. Perhaps more importantly, I don’t want to borrow to buy stocks because I would have to pay interest costs that eat away at my returns.

There is also another big reason why I would never consider buying stocks with a credit card. If I did this and my investments ended up losing money, I would still have to pay back what I owed (plus accrued interest charges). So I would pay interest to repay the money I lost. I don’t want to take that risk.

2. Mortgage payments

I make monthly mortgage payments, but I would never consider paying my mortgage with a credit card either.

My bank, and most other mortgage lenders, don’t accept credit card payments, so I would have to jump through some hoops if I wanted to use my cards to pay my home loan. This would involve using a third-party service. And this service charges a fee. It’s not worth paying a fee to use my cards to cover the cost of my home loan, especially since the fee would dwarf the value of any rewards I could earn.

My mortgage is also at a much lower interest rate than my credit cards would charge. And because my husband and I itemize when we file taxes instead of claiming the standard deduction, I can deduct the interest I pay on my loan. I couldn’t deduct interest charges on a credit card if I paid my mortgage with a credit card.

There’s no reason to switch to higher cost non-deductible debt by transferring part of my mortgage to a credit card, especially since I’d be hit with additional fees to do so.

3. Crazy stuff I can’t afford

Finally, the last thing I would ever consider charging a credit card for is splurging that I can’t afford. This includes anything that I was unable to pay in full when my return was due and that is not an absolute necessity.

I wouldn’t consider, for example, charging a vacation or a large purchase to a card. I would either pay cash for these purchases (which is the ideal option and what I do most of the time) or I would use a cheaper form of debt like a personal loan if I had to finance them over time because that I could not pay in advance.

Ultimately, before I charge anything, I want to be sure that I can afford to fully refund what I charge and make sure that I won’t be hit with any additional fees or interest that will make my purchase more expensive. If not, I will not charge for the purchase.

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