Credit cards
can be valuable tools to help cover unplanned expenses and can help really
boost your credit score when used correctly.
At the same time, though, credit card debt can spiral out of control
easily leading to a damaged credit score, a lot of stress, and hefty interest
on a large balance. Here's three things to avoid using your credit card to pay for:
1. Down Payments – If you are looking at a large purchase
that requires some sort of down payment, it’s best to opt for your own cash
instead of a credit card or cash advance.
With purchases that require down payments, you are likely going to have
a loan with a monthly payment and interest already, so paying interest on the
down payment too only hurts you in the long run.
2. College Tuition – College debt is a very real situation for
many students, but avoiding credit cards as part of that debt will help you graduate
to the best financial situation possible.
Opt for student loan options that typically have lower interest rates,
more manageable monthly payments, and offer the flexibility of waiting until
after graduation to begin repayment.
3. Special Events – Whether it’s a big family vacation or a
wedding that you are faced with financing, take a look at other finance options
before swiping that credit card. Don’t
damper your special event from the get go with the interest rate that comes
along with many credit cards. If you
don’t have the cash to pay for that vacation or wedding, look at other ways to
finance like a secured fixed rate loan or even a home equity option that could
give you a clearer repayment plan and often much lower interest rate.
A best practice
on using credit cards is to only use them to purchase items that you know you
can pay off in full. We know that can
sometimes that can be easier said than done though, so if you find yourself in
a credit card situation that you aren’t sure how to handle give Honor a
call. Debt consolidation and balance
transfer options might be an option that your local credit union, like Honor,
can offer to make credit card repayment a realistic and manageable goal.
Don’t forget
to follow us on twitter @honorcu and let us know what you want to hear about
next week using #askhonorcu!
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