Post by MacBeth on May 15, 2011 5:54:20 GMT -5
6 types of purchases you should always charge on your credit card
Two of the most common features that consumers consider when they use a credit card are the interest rates and rewards .
For Greg McFarlane, author of "Control Your Cash: Making Money Make Sense," the most important feature of all is one that few people even recognize: "The main thing I care about as a consumer is the protection a credit card gives me," he says.
From travel insurance to fraud protection, these little-known credit card services can be worth thousands of dollars over the life of a card for those who spend the time to take advantage of them. "People don't usually take the time to read the information that's sent to them, and it's not what they're thinking about when they get a card," says Carrie Coghill, director of consumer education for FreeScore.com. "But the reality is that there are some good reasons to use a credit card, as long as you follow a few rules."
Just as there are some items you should never charge on a credit card , there are some you should -- that is, when you have the cash to pay a balance on time and in full. Because of key perks and protections embedded in many cards, you'll get what you pay for -- and then some.
1. Big-ticket items
From computers to home appliances, major purchases are almost always worth putting on a credit card, says Coghill. "Not only can you typically get extended warranties over and above the original warranty offered, but some cards will give you price protection," she says. "If you find a lower price within 60 days, you can be reimbursed the difference." That can be a lifesaver if your fridge goes on the fritz and you need a new one immediately. You may not get the best price when you buy it, but putting it on a credit card means you can price shop at your leisure and still get the benefit.
2. Service provider purchases
If you got new tile in your bathroom or new landscaping in your backyard, everything might have looked fine when it was installed and you paid for the service. But a week later, perhaps the grout is cracking or the shrubs have died. "If you paid with cash or a debit card, that money's already out the door," says McFarlane. "But if you pay with a credit card, the burden of proof is on the merchant to show that the work was done to your satisfaction." Because merchants who accept credit cards agree to the terms set by the card companies, the card company can exert serious leverage and charge back disputed purchases when one of its customers has been wronged.
3. Fragile or breakable items
That delicate vase was going to look gorgeous in your dining room -- before you tripped on a stair and smashed it to pieces. Your new laptop was going to change your life -- and then you dumped an entire cup of coffee on it. If you made the purchase on a credit card, you might not be out of luck, says Kim McGrigg, spokesperson for Money Management International, a national credit counseling agency. She also also writes the weekly Credit Cares Q&A column for CreditCards.com. "When a problem like this arises, people might think about contacting the store or the manufacturer," she says. "But in addition to these things, you should think about calling your credit card company." While you might only be able to recover a few hundred dollars in damages, it's certainly better than having to eat the entire cost yourself.
4. Travel expenses
Credit cards shouldn't be used to buy a trip you can't afford, but if the money's in the bank, you can put almost every travel expense on your card and see extra perks. Many cards offer an array of travel services, from automatic travel accident insurance , car rental insurance and lost luggage insurance. "There are cards that will even reimburse you for essentials if your luggage is delayed or if things are stolen from your hotel room," Coghill says.
5. Automatically recurring purchases
From gym memberships to cable packages to credit monitoring services, it's easy to sign up for monthly expenses and then find that you're not taking advantage of them. Sometimes it's easy to get taken off of subscriber rolls, but other times you'll need to get tough. "Some companies don't have the best reputation for customer service; they'll start automatic recurring payments but won't stop. Paying by credit card offers a layer of protection between you and the biller," says Liz Weston, author of " The 10 Commandments of Money ." If a call to the primary company won't stop the payments, a call to your credit card company will.
6. PayPal purchases
When you sign up for PayPal, the site will encourage you to pay sellers directly from your bank account, but that's not the wisest decision, says Weston. "The protections you get from those transactions are dictated by the method of payment you use," she says. "Transactions made using your bank accounts are governed by different federal regulations , which are inferior" to those of credit cards. Unplug your bank account from PayPal and make the credit card company as your middleman, and you'll have an easier time keeping your money in the bank if you're defrauded or need to dispute a purchase.
finance.yahoo.com/news/6-types-purchases-charge-creditcards-4152561083.html?x=0
6 expenses you should never put on a credit card
There are some things experts say you should never put on a credit card if you can't pay the bill right away -- either because they're frivolous, or they can land you deep in debt or, in some cases, because there's a better alternative.
If you have plenty of money in your bank account, it can make sense to put just about any big purchase on your credit card because of the rewards , convenience and consumer protections that come with plastic. When you're broke, though, it's one thing to use your card for an emergency. It's quite another, however, to splurge on a mommy makeover, an island vacation or a diamond engagement ring .
Here are six credit card purchases experts say cash-strapped consumers should avoid at all costs.
1. A big tax bill
A tax bill from the IRS could make a nervous taxpayer reach for a credit card. But don't do it. "Federal income tax is right at the top of the list of things not to pay with a credit card," says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies . "When people get in this type of situation, it's usually a fairly large tax bill, and it can be difficult to pay off those credit cards." In addition, you'll pay a processing fee that could be 2 percent or more of the total amount you pay by credit card.
The alternative: The IRS will set up a payment plan at a much lower interest rate than a credit card offers, experts say. "It's amazing, but the IRS actually charges less interest than anybody else. It's very low now, less than 5 percent," Jones says.
2. A gambling spree
Entrepreneur Rod Ebrahimi, who is developing an online financial application called ReadyforZero to help consumers pay down debt, says he has a friend who recently gambled away more than $3,000 taken from a credit card cash advance . "If you're sitting at a table in Vegas, they make it really easy to pull cash with your plastic. They'll process it for you, bring you some nice chips and you can keep on gambling," Ebrahimi says. "And a lot of people don't understand APRs for cash advances are much higher -- upward of 30 percent."
The alternative: If you have a gambling problem, seek counseling or other help, recommends Jones, who recently helped a client who had racked up $113,000 in credit card debt playing online poker . If gambling is more of a hobby, Ebrahimi recommends steering clear of casinos when you're short on cash -- or playing poker online without betting money.
3. College tuition
Experts say it's not smart to finance college tuition on credit cards. "College tuition can be a very significant expense," Jones says, noting that charging tuition on credit cards might make sense only if you know you'll be able to pay it off in full within three months.
The alternative: Experts recommend putting all options on the table. That includes grants, scholarships, low-interest student loans, a part-time job, attending community college for a few years or attending a less-expensive university. "It's a good idea to meet with a credit counselor to get some help understanding all of your options," Jones says. "Student loans can be a very good option, but you need to make a plan to repay them. Some people get into a huge amount of debt with student loans."
4. Plastic surgery
Reality shows such as "Extreme Makeover" make it seem routine to get nips, tucks and D-cups, but pulling out plastic to pay for it is a bad idea, experts say. "Most of it is vanity stuff, and charging that is crazy," Jones says. Carrie Coghill, a personal finance author and director of consumer education for FreeScore.com, says she increasingly sees consumers being swayed by medical spa sales pitches to charge seemingly less expensive procedures such as Botox injections and laser treatments. "It might cost $1,500 each time, but those things can really add up -- people get grabbed in, and it never ends," Coghill says. She cautions consumers to read the fine print on offers for medical credit cards, such as CareCredit, that offer a zero percent introductory rate. "The day you make a payment late, they typically will go back and charge you interest from day one," Coghill says.
The alternative: As with any luxury purchase, consumers should either save up for it -- or skip it, experts say.
5. A lavish wedding
One consumer who turned to Ebrahimi for help got into trouble by charging up $50,000 in credit card debt -- much of it on a big wedding followed by a honeymoon in Barcelona. "I think a lot of times people get caught up in the event and spend more than anticipated. It's very common to blow your budget," says Clarky Davis, a financial counselor who runs TheDebtDiva.com. Statistics show finances can cause tension between couples , so starting off married life by running up debt is a bad idea, Davis says. "When you come home from the honeymoon and have to face a monster credit card bill, it can cause a lot of stress," Davis says. "You can't focus on where you are right now because you're still paying off the past."
The alternative: Most experts recommend scaling back and focusing on meaningful, rather than material, aspects of the wedding. "The people you love could care less if there's an open bar or you're wearing a $5,000 dress," Davis says. "Stay within your means."
6. A trip for two
It's a bad idea to finance a vacation with plastic, experts say, and that goes double for paying someone else's tab, too. Monica Lichi, a nonprofit manager in Ohio, spent years paying off a Hawaiian cruise she took with an ex. "Neither of us had the money, so I said, 'Oh, I'll just put it on my credit card,'" Lichi recalls. After living it up on the trip -- they island-hopped, went ziplining and sipped fruity cocktails -- Lichi returned home to a huge bill. "The inconvenient part comes when you break up and they don't pay you back," says Lichi, who is using the online service DebtGoal.com to pay down her five-figure credit card debt.
The alternative: Well in advance, start making a monthly payment into a bank account -- the reverse of what you'd do if you paid with a card, Coghill recommends. "It feels so much better to pay in cash and not come back from vacation with a credit card hangover," she says. If you're going with a friend, an online service such as WePay.com can allow you to pool money in advance and pay expenses with a shared debit card rather than your credit card.
So, how do you stay sane with your credit cards? Experts recommend taking your time and avoiding impulsiveness, especially when money is tight. "If you're thinking about putting a vacation on a credit card, or even a pair of shoes, you should walk away, think about it and come back later," Coghill says. "If you're charging anything over $1,000, you really should be asking yourself, 'What am I doing?'"
finance.yahoo.com/news/6-expenses-put-credit-card-creditcards-3336713957.html?x=0
Two of the most common features that consumers consider when they use a credit card are the interest rates and rewards .
For Greg McFarlane, author of "Control Your Cash: Making Money Make Sense," the most important feature of all is one that few people even recognize: "The main thing I care about as a consumer is the protection a credit card gives me," he says.
From travel insurance to fraud protection, these little-known credit card services can be worth thousands of dollars over the life of a card for those who spend the time to take advantage of them. "People don't usually take the time to read the information that's sent to them, and it's not what they're thinking about when they get a card," says Carrie Coghill, director of consumer education for FreeScore.com. "But the reality is that there are some good reasons to use a credit card, as long as you follow a few rules."
Just as there are some items you should never charge on a credit card , there are some you should -- that is, when you have the cash to pay a balance on time and in full. Because of key perks and protections embedded in many cards, you'll get what you pay for -- and then some.
1. Big-ticket items
From computers to home appliances, major purchases are almost always worth putting on a credit card, says Coghill. "Not only can you typically get extended warranties over and above the original warranty offered, but some cards will give you price protection," she says. "If you find a lower price within 60 days, you can be reimbursed the difference." That can be a lifesaver if your fridge goes on the fritz and you need a new one immediately. You may not get the best price when you buy it, but putting it on a credit card means you can price shop at your leisure and still get the benefit.
2. Service provider purchases
If you got new tile in your bathroom or new landscaping in your backyard, everything might have looked fine when it was installed and you paid for the service. But a week later, perhaps the grout is cracking or the shrubs have died. "If you paid with cash or a debit card, that money's already out the door," says McFarlane. "But if you pay with a credit card, the burden of proof is on the merchant to show that the work was done to your satisfaction." Because merchants who accept credit cards agree to the terms set by the card companies, the card company can exert serious leverage and charge back disputed purchases when one of its customers has been wronged.
3. Fragile or breakable items
That delicate vase was going to look gorgeous in your dining room -- before you tripped on a stair and smashed it to pieces. Your new laptop was going to change your life -- and then you dumped an entire cup of coffee on it. If you made the purchase on a credit card, you might not be out of luck, says Kim McGrigg, spokesperson for Money Management International, a national credit counseling agency. She also also writes the weekly Credit Cares Q&A column for CreditCards.com. "When a problem like this arises, people might think about contacting the store or the manufacturer," she says. "But in addition to these things, you should think about calling your credit card company." While you might only be able to recover a few hundred dollars in damages, it's certainly better than having to eat the entire cost yourself.
4. Travel expenses
Credit cards shouldn't be used to buy a trip you can't afford, but if the money's in the bank, you can put almost every travel expense on your card and see extra perks. Many cards offer an array of travel services, from automatic travel accident insurance , car rental insurance and lost luggage insurance. "There are cards that will even reimburse you for essentials if your luggage is delayed or if things are stolen from your hotel room," Coghill says.
5. Automatically recurring purchases
From gym memberships to cable packages to credit monitoring services, it's easy to sign up for monthly expenses and then find that you're not taking advantage of them. Sometimes it's easy to get taken off of subscriber rolls, but other times you'll need to get tough. "Some companies don't have the best reputation for customer service; they'll start automatic recurring payments but won't stop. Paying by credit card offers a layer of protection between you and the biller," says Liz Weston, author of " The 10 Commandments of Money ." If a call to the primary company won't stop the payments, a call to your credit card company will.
6. PayPal purchases
When you sign up for PayPal, the site will encourage you to pay sellers directly from your bank account, but that's not the wisest decision, says Weston. "The protections you get from those transactions are dictated by the method of payment you use," she says. "Transactions made using your bank accounts are governed by different federal regulations , which are inferior" to those of credit cards. Unplug your bank account from PayPal and make the credit card company as your middleman, and you'll have an easier time keeping your money in the bank if you're defrauded or need to dispute a purchase.
finance.yahoo.com/news/6-types-purchases-charge-creditcards-4152561083.html?x=0
6 expenses you should never put on a credit card
There are some things experts say you should never put on a credit card if you can't pay the bill right away -- either because they're frivolous, or they can land you deep in debt or, in some cases, because there's a better alternative.
If you have plenty of money in your bank account, it can make sense to put just about any big purchase on your credit card because of the rewards , convenience and consumer protections that come with plastic. When you're broke, though, it's one thing to use your card for an emergency. It's quite another, however, to splurge on a mommy makeover, an island vacation or a diamond engagement ring .
Here are six credit card purchases experts say cash-strapped consumers should avoid at all costs.
1. A big tax bill
A tax bill from the IRS could make a nervous taxpayer reach for a credit card. But don't do it. "Federal income tax is right at the top of the list of things not to pay with a credit card," says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies . "When people get in this type of situation, it's usually a fairly large tax bill, and it can be difficult to pay off those credit cards." In addition, you'll pay a processing fee that could be 2 percent or more of the total amount you pay by credit card.
The alternative: The IRS will set up a payment plan at a much lower interest rate than a credit card offers, experts say. "It's amazing, but the IRS actually charges less interest than anybody else. It's very low now, less than 5 percent," Jones says.
2. A gambling spree
Entrepreneur Rod Ebrahimi, who is developing an online financial application called ReadyforZero to help consumers pay down debt, says he has a friend who recently gambled away more than $3,000 taken from a credit card cash advance . "If you're sitting at a table in Vegas, they make it really easy to pull cash with your plastic. They'll process it for you, bring you some nice chips and you can keep on gambling," Ebrahimi says. "And a lot of people don't understand APRs for cash advances are much higher -- upward of 30 percent."
The alternative: If you have a gambling problem, seek counseling or other help, recommends Jones, who recently helped a client who had racked up $113,000 in credit card debt playing online poker . If gambling is more of a hobby, Ebrahimi recommends steering clear of casinos when you're short on cash -- or playing poker online without betting money.
3. College tuition
Experts say it's not smart to finance college tuition on credit cards. "College tuition can be a very significant expense," Jones says, noting that charging tuition on credit cards might make sense only if you know you'll be able to pay it off in full within three months.
The alternative: Experts recommend putting all options on the table. That includes grants, scholarships, low-interest student loans, a part-time job, attending community college for a few years or attending a less-expensive university. "It's a good idea to meet with a credit counselor to get some help understanding all of your options," Jones says. "Student loans can be a very good option, but you need to make a plan to repay them. Some people get into a huge amount of debt with student loans."
4. Plastic surgery
Reality shows such as "Extreme Makeover" make it seem routine to get nips, tucks and D-cups, but pulling out plastic to pay for it is a bad idea, experts say. "Most of it is vanity stuff, and charging that is crazy," Jones says. Carrie Coghill, a personal finance author and director of consumer education for FreeScore.com, says she increasingly sees consumers being swayed by medical spa sales pitches to charge seemingly less expensive procedures such as Botox injections and laser treatments. "It might cost $1,500 each time, but those things can really add up -- people get grabbed in, and it never ends," Coghill says. She cautions consumers to read the fine print on offers for medical credit cards, such as CareCredit, that offer a zero percent introductory rate. "The day you make a payment late, they typically will go back and charge you interest from day one," Coghill says.
The alternative: As with any luxury purchase, consumers should either save up for it -- or skip it, experts say.
5. A lavish wedding
One consumer who turned to Ebrahimi for help got into trouble by charging up $50,000 in credit card debt -- much of it on a big wedding followed by a honeymoon in Barcelona. "I think a lot of times people get caught up in the event and spend more than anticipated. It's very common to blow your budget," says Clarky Davis, a financial counselor who runs TheDebtDiva.com. Statistics show finances can cause tension between couples , so starting off married life by running up debt is a bad idea, Davis says. "When you come home from the honeymoon and have to face a monster credit card bill, it can cause a lot of stress," Davis says. "You can't focus on where you are right now because you're still paying off the past."
The alternative: Most experts recommend scaling back and focusing on meaningful, rather than material, aspects of the wedding. "The people you love could care less if there's an open bar or you're wearing a $5,000 dress," Davis says. "Stay within your means."
6. A trip for two
It's a bad idea to finance a vacation with plastic, experts say, and that goes double for paying someone else's tab, too. Monica Lichi, a nonprofit manager in Ohio, spent years paying off a Hawaiian cruise she took with an ex. "Neither of us had the money, so I said, 'Oh, I'll just put it on my credit card,'" Lichi recalls. After living it up on the trip -- they island-hopped, went ziplining and sipped fruity cocktails -- Lichi returned home to a huge bill. "The inconvenient part comes when you break up and they don't pay you back," says Lichi, who is using the online service DebtGoal.com to pay down her five-figure credit card debt.
The alternative: Well in advance, start making a monthly payment into a bank account -- the reverse of what you'd do if you paid with a card, Coghill recommends. "It feels so much better to pay in cash and not come back from vacation with a credit card hangover," she says. If you're going with a friend, an online service such as WePay.com can allow you to pool money in advance and pay expenses with a shared debit card rather than your credit card.
So, how do you stay sane with your credit cards? Experts recommend taking your time and avoiding impulsiveness, especially when money is tight. "If you're thinking about putting a vacation on a credit card, or even a pair of shoes, you should walk away, think about it and come back later," Coghill says. "If you're charging anything over $1,000, you really should be asking yourself, 'What am I doing?'"
finance.yahoo.com/news/6-expenses-put-credit-card-creditcards-3336713957.html?x=0
