4 times the use of your credit card will cost you more, finance experts say
Paying a different way could seriously pay in the long term.
The use of a credit card is a great way to Build your credit scoring , and in some cases, even accumulate points and earn For your purchases. That said, this is not the best form of payment in each scenario. According Scott Nelson , CEO of Moneynerd, credit cards sometimes have potential drawbacks, such as merchant interest and costs.
"Some companies charge you more for the use of a credit card," explains Todd Stearn , expert in personal finance and founder of The money manual . "I saw this in service stations and certain restaurants. In these cases, you don't really need consumer protection and credit card rewards will probably not compensate for more important expenses."
So when you should eliminate money, debit card Or checkbook instead? Below, the experts share some situations in which the use of a credit card could end up costing you more.
Read this then: Always use money for these 5 purchases, say financial experts .
1 When you transfer a balance.
Before transferring your balance from one credit card to another, consider this: Most of the credit card companies generally charge you transfer fees, explains Nelson.
According Michael Collins , CFA, CEO of Wincap Financial And Professor at the Endicott College , these costs may vary from 3 to 5% of the amount of the transfer. AE0FCC31AE342FD3A1346EBB1F342FCB
If you want to avoid this entirely, Nelson advises the search for credit card companies which offer promotions for one percent of balance transfer fees.
2 For a foreign transaction.
Something to keep in mind: some credit card companies charge transaction costs abroad. "There is also the additional potential cost of a currency conversion fee, which would be added to foreign transaction costs," said Nelson.
According to Stearn, these costs are generally about 3.5%. He notes that some credit cards, including Capital One and Discover, do not charge these costs.
"I would recommend reading the terms and conditions before shopping on your credit card abroad," adds Nelson.
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3 When you cannot refund the balance in time.
Unless you are absolutely sure that you will remember to reimburse the balance of your purchase by the due date, use another payment method. Otherwise, Nelson says that late costs - which often cost up to about $ 40 - increased quickly.
Worse still, Collins notes that a penalty APR can also be applied when your card carries a balance, which then results in a higher interest rate.
According Derek Sall ,, Personal finance expert and founder of Life and my finances , this apr penalty can reach 30%.
Without forgetting, payment delays can hurt your credit scoring .
Read this then: Never use your credit card for these 6 purchases, according to financial experts .
4 For advance advances.
According to Collins, when you remove a fundraising using your credit card, you will often be billed a higher interest rate that you would for regular purchase.
In addition, you may also have to pay fees in fundraising, Pavement ,, Finance consultant and CEO / founder of Masut group Remember.
"It is important to note that interest on advance advances are generally beginning to accumulate immediately, which means that there is no period of grace as for regular purchases," he explains. "So, if you are considering a fundraising, it is worth exploring other options such as a personal loan, which can have a lower interest rate and less costs."
Best Life offers the most up -to -date financial information for high -level experts and latest news and research, but our content is not supposed to replace professional advice. Regarding the money you spend, save or invest, always consult your financial advisor directly.
