by Maurie Backman | March 6, 2021
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Your credit card could come in handy for more bills than you'd think.
You probably swipe your credit cards regularly for things like fuel, groceries, and takeout meals. And you may have some recurring charges that go on your card every month, like your streaming service, cable bill, or cell phone. But did you know you might be able to put larger purchases on your cards, too? Here are a few that might surprise you.
Many people can't buy a vehicle outright -- that's what auto loans are for. But usually, with a car loan, you'll put some money down on your vehicle up front, similar to how you'd put a down payment on a house, and finance the rest. And some dealers might allow you to charge that down payment on a credit card.
Now, before you get too excited, one thing you should know is that you'll generally have to pay a transaction fee. And that fee could be enough to wipe out the reward points you get in return. Find out what added charge you'll incur for using your credit card as a car down payment before moving forward.
Most landlords require you to pay your rent with a check. But some landlords or property management companies do, in fact, allow tenants to pay their rent with a credit card.
As is the case with a car down payment, you'll generally be charged a processing fee to go this route. Remember, credit cards charge merchants a fee to process transactions. It's a pretty standard assumption that your landlord isn't going to want to pay that fee when collecting a rent check -- so expect to pay it yourself if you charge your rent.
Some colleges and private schools allow you to pay tuition (and fees) with a credit card. Now, you can probably see where this is going. Before you do so, find out if there's a processing fee. In some cases, there will be one, but in some cases, there may not be. You may also be able to charge the cost of room and board on a credit card if that's something you're paying directly to the university.
Charging a vehicle down payment, rent, or tuition on a credit card may seem appealing, especially when you consider all the cash back or reward points you could rack up. But remember, not all auto dealers, landlords, and learning institutions allow you to use a credit card in the first place. And those that do may pass certain fees onto you that wipe out your benefits.
Work out how much you'll pay versus the benefits you get. For example, if you'd pay a processing fee of 1.8% and earn 2% in credit card rewards, it might be worth it. However, if you only get 1.5% back, it will cost you more than you gain.
Get all of the facts before using a credit card for less conventional purposes. You may find you're better off writing a check. You can reserve your credit cards for expenses like groceries and entertainment -- things that generally don't come with extra costs.
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