25th September 2017 - 4 min read
While you might be tempted to swipe your card every time you need to pay for something, know that certain costs are better borne with cash or other methods of financing.
Here are five expenses that you might want to refrain from swiping for:
This can be a rather costly expense for which to swipe your credit card. If you need two types of financing (credit plus a hire purchase loan) to buy one item, you might want to reconsider the purchase as this could be a sign that you can’t actually afford it. It might be too costly to pay for interests on both sides and you could put yourself in line for more debt.
What you can do instead is look for a zero-down payment loan which exists for many car models. Another option is to check out step-up financing plans that let you pay less now and more later on when your income has increased.
The only good reason to use your card for medical bills is that you’ll have an easily traceable statement come tax time when you want to claim for reliefs. However, medical costs are often heavy, sometimes recurring, and if you don’t repay it on time, can quickly add up. One option besides using a credit card to pay for medical bills is to withdraw from your EPF, this way; you don’t have to worry about the interests accruing.
Also, if you don’t already have some form of medical insurance, it’s best to buy now and save yourself the hassle of paying for healthcare on your own.
If you are coming up short on your home loan instalments, you might be tempted to put it on your card (by taking our a cash advance). However, if you are unable to repay the charge before the grace period you will be stuck with not one, but two interest-inducing loans. This could eventually lead to big debt and if you are not careful, it could also leave a black mark on your credit status.
Instead, consider using your EPF to redeem a part of the loan so you downscale the monthly repayments and make it more affordable.
Read Also: 4 Things to Know About EPF Withdrawals
Who doesn’t dream of a fancy wedding? The costs however, are often a nightmare and while it might seem attractive to pay for it (or parts of it) with your credit card, repayments can be heavy if you don’t keep track of your swipes. Instead of using your credit card, a low-interest personal loan might be a better option to help pay for wedding costs. With small structured repayments at low rates, you’ll enjoy a more affordable method to pay for a big wedding.
What you can use your credit card for instead is to book your honeymoon hotel suite and flight tickets, as well as pay for dining to enjoy potentially better rates, discounts, travel insurance and reward points.
You may have a wonderful small business idea in mind but without the cash to make it happen. Still, using your credit card should only come as a last resort option. This is because if you are not careful with the business expenses you charge to the card, you might rack up a huge bill. Plus, there are plenty of uncertainties that float around a new small business (or any business for that matter) and if you aren’t able to repay the credit in a timely manner, you might end up in debt.
A low-interest business loan or personal loan might be a more cost-efficient option to help run your business, not to mention you’ll have access to a larger sum of money.
Lastly, don’t bother swiping your card with merchants that charge a fee when you use your card. This is usually the case with smaller traders and businesses, so you should think twice before using your credit card at these venues and unnecessarily paying extra. If the item that you are buying is eligible and could benefit from credit card Purchase Protection, look for another merchant that won’t charge for card payments.
On the flipside, some merchants may provide discounts for non-card payments, so do ask before deciding to pay with cash or card.
Looking for a new credit card or just a better one to add your wallet? Head on over to our credit card credit card comparison page to research your heart out and discover the right card for you!
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