Credit cards can be one of the single most powerful items in your wallet. When used correctly, they can steadily build a positive credit history, greenlighting your way to better interest rates and loan approvals. Mismanagement of credit cards, on the other hand, could send you spiraling into debt and financial woes. With their sheer power and convenience in a tech-friendly marketplace, it seems difficult to envision purchases you can’t buy with your credit card. However, there are several scenarios in which you cannot use plastic to finance your purchases. Read on for our roundup of the most common items you can’t buy with your credit card.
Payments for Other Credit Cards
If you’ve ever been strapped for cash around the time one of your credit card payments was due, you might have toyed with the idea of using another credit card to make the payment. Beyond the fact that this typically will not make much financial sense, it’s also a no-no for credit card companies. You probably won’t even be able to find the option to do so on your card’s payment platform. There is, however, a loophole: you can transfer your balance to another credit card, but you will incur a balance transfer fee and possibly other conditions.
Illegal or High-Risk Activities
Think twice before you charge anything that could be considered an illegal or high-risk activity. A credit card company may disallow the charge. Examples of such activities include casino gambling, online gambling, adult pornography, medical marijuana, and lottery tickets. Of course, some of these activities are legalized or at least operate in a legal gray area — but many credit card companies have decided that they are simply not worth the risk, due to the high likelihood that these customers will dispute the charges at a later date. Online gambling, for instance, is illegal in the United States, so most of those sites will prohibit you from paying with plastic. In other situations, it’s up to the card issuer to decide what is acceptable card usage. For American Express, online pornography and medical marijuana don’t pass muster, but these activities could be fair game for other card companies.
Substantial Loan Payments
You might salivate at the idea of all the rewards points you could rack up by charging your mortgage or student loan payment (and then immediately paying off the bill from your checking account). Generally, though, your lender has rules in place to forbid you from doing this. It’s likely a combination of reasons; on the lender’s side, they do not want to pay the hefty credit card merchant fees, while the credit card company doesn’t want to take on the risk of a substantial charge that may or may not be paid off. Your checking account is generally the smartest funding source for these transactions.
You will likely have to pony up cash or a debit card to purchase a money order, for the simple reason that a money order basically amounts to purchasing cash. Be wary of any money order issuer that doesn’t bat an eye when you hand over your credit card. Even if it’s accepted, you will probably end up paying a fee and a higher interest rate for this transaction, since your credit card company will likely treat it as a cash advance.
Depending on the type of card you have, you may or may not have trouble using your credit card to purchase cryptocurrency, such as bitcoin. Some card issuers may allow it, but then later slap you with a cash advance fee for the transaction. For that reason, it’s best to avoid using plastic for cryptocurrency purchases altogether.
In most cases, you can’t buy stocks with your credit card. Your investment accounts generally must be funded with actual money from your checking account. Most brokerage firms strictly prohibit the use of plastic. Even if you could find a service that might allow credit cards, you would likely lose out on any of the benefits, thanks to the steep credit card interest rate and the relatively low rate of return on any investments you’d be making.
Education Leads to Success
At Ovation Credit, we want to equip you with the tools and knowledge to build a better credit life. Make today the day you start on the journey to a more improved credit standing. Reach out to us for a free consultation here.