5 Expenses You Should Never Put on Your Credit Card

Medical expenses can be planned or unplanned, and with rising medical costs it has become a major financial event in either of the cases. In the latter case of an emergency medical situation, it makes sense to use your credit card to pay the hospital bills but in case of planned medical expenses, there may be better options. Mostly, people aged 40 and above tend to put these bills on their credit cards as health risk also increases with age.

Ideally, you must plan in advance for high-ticket health expenses by taking medical insurance before you reach 30. Insurance not only covers you for emergency hospitalization but also makes a great investment alternative for your hard-earned money. Going into a credit card debt may be good when there is no other alternative, but for planned expenses, you should definitely look for better options.

Everyone dreams of visiting an exotic destination but whether to put this expense on a credit card is a tricky question. Some would say that using a credit card is a bad idea for discretionary expenses like these but sometimes credit cards can be really useful. Travel-centric credit cards allow you to save on flight bookings and hotel stays. There are other credit cards that offer benefits when you use them for international expenses. Before putting all your vacation expenses on credit cards, you should ask yourself the following questions:

• Is my credit card globally accepted?
• How much international expense benefit does my card offer?
• Is this benefit in the form of extra reward earnings/ cashback or direct discounts?
• What is the foreign exchange mark-up fee on my credit card?
• Are there any other extra charges/ fees that I will have to pay?

Mostly, the millennial generation (18-35 years) is ready to incur debts to travel to their dream destinations. Using your credit card blindly will do more harm than good; it is extremely important to strategize your finances before a vacation. A personal loan can also be a good way of financing your vacation at a comparatively lower rate of interest. Plan in a way that you return with the memories of a wonderful vacation and not the regret of heavy bills.

Suggested read: What to Expect from your Credit Card’s Travel Insurance?

Most of the credit cardholders would be eager to take up debt to make a major life event more memorable. These events generally include marriage, childbirth, etc. However, it makes more sense to save for these events in advance as such events are usually pre-planned. This is again a discretionary expense and may not be worth incurring a huge debt. Since you have control over these major events, plan these in a way that you have enough time to save towards it. And when you plan for these expenses, try to stay within your means so that you do not fall into a debt pit after the event.

The millennial generation is very outgoing and vocal about the good things in their life. When you get good news, it is natural to share it with others and celebrate with your loved ones. But is it worth putting yourself in debt? You must rethink it. Just because it is a special occasion does not mean it has to be overly expensive. Staying within your means will not only save you from debt but also make you more disciplined towards your finances. After you have created a budget for the celebration, learn about the offers on your credit card and make good use of it. For example, if you are treating your friends to dinner, put the bills on a credit card that offers good dining benefits.

Also read: Should you Convert Credit Card Purchases into EMIs?

For some people, giving gifts to loved ones is really important. However, you would not like to compromise on your own essentials in order to be able to give a gift, and at the same time, it is not worth taking up a credit. The best idea is to start saving for someone’s big day as soon as you get the news. Cut down on your non-essential purchases to make up for the cost of the gift. In any case, going into debt is not worth the joy for others.

We have discussed all the expenditures which you should never put on your credit card. The table given below shows a gist of how you should fund these common expenditures:

‘Debt’ and ‘Regret’ are not just two rhyming words; the link between the two is strong, so you need to be cautious while using your credit card. The expenses mentioned above are not unreasonable. It is just that cash is the best mode of payment in most of the cases. Plan for major expenses in advance and incorporate smaller expenses in your monthly budget.