The advantages of credit cards are many. For example, they facilitate online purchases, they are useful in case of emergencies, and they can give cashback rewards. There is, however, one considerable risk to using them: if we’re not careful, we can quickly find ourselves in a whole lot of debt.
Here are three things that you should avoid using your credit card for:
#1) A Vehicle
It would be unwise to buy a car with a credit card. The interest and additional fees alone would end up making the car too expensive to be worth it.
It is equally detrimental to make a cash withdrawal using your credit card to put a down payment on a vehicle, as financial institutions charge interest the minute you make a withdrawal.
If you are having a hard time getting a loan for a car, it`s better to turn to companies that specialize in this type of financing. For example, one such company, Club Crédit Plus, guarantees financing for your vehicle, even if you have been refused credit elsewhere.
#2) Your Income Tax
According to the Canada Revenue Agency, it is possible to pay your income tax by credit card. The problem is that to do so, you must go through a third-party service provider. These providers charge fees as high as 2.5%, even when you pay on time.
#3) Business Start-Up Costs
Considering that it usually takes several years for a business to start being profitable, you should not use a high-interest credit card to pay start-up expenses. Instead, ask your financial institution for a line of credit, which typically has much lower interest rates.
As we’ve seen here, certain things should never be paid with a credit card because they end up being far too costly. If you need to borrow money, it`s better to get help from a financial institution that can find the best possible solution for your needs.