- I make nearly all of my purchases using a credit card.
- There are a limited number of things I would never charge, though.
- This includes stock purchases and my mortgage payments.
It doesn't pay to charge some things.
I have a credit card with a great rewards program and I charge almost all of my purchases on that card in order 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's what they are.
I invest regularly, purchasing stocks and ETFs often. But I don't ever pay for stocks with a credit card and I never will. There are a few reasons for this.
First, most brokerages don't allow you to use a card to buy stocks. And in situations where it is possible, there are costly fees charged. Perhaps even more importantly, I don't want to borrow to buy stocks because I would have to pay interest charges that eat away at my returns.
There's also another big reason why I would never consider buying stocks on a credit card. If I did that and then my investments ended up losing money, I would still have to repay what I owed (along with any interest charges accrued). So I'd be paying interest to repay money that I lost. I don't want to take that chance.
2. Mortgage payments
I make mortgage payments monthly, but I would never consider paying my mortgage with a credit card either.
My bank, and most other mortgage lenders, do not accept credit card payments so I would have to jump through hoops if I wanted to use my cards to pay my home loan. This would involve using a third-party service. And that service charges fees. It's not worth paying a fee to use my cards to cover the cost of my home loan -- especially since the fees would dwarf the value of 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 wouldn't be able to deduct the interest charges on a credit card if I paid my mortgage with one.
There's no reason to switch to higher cost, non-deductible debt by putting any portion of my mortgage onto a credit card -- especially since I'd get hit with added fees to do so.
3. Splurges I can't afford
Finally, the last thing I would never consider charging on a credit card is splurges that I cannot afford. This includes anything that I couldn't pay off in full when my statement was due that isn't an absolute necessity.
I would not, for example, consider charging a vacation or a big purchase on a card. I'd 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 such as a personal loan if I had to fund them over time because I couldn't pay upfront.
Ultimately, before charging anything, I want to be sure I can afford to repay what I'm charging in full and to make sure I won't be hit with added fees or interest that make my purchase costlier. If that's not the case, I won't charge the purchase.
Alert: highest cash back card we've seen now has 0% intro APR until nearly 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.