7 times you shouldn’t pay with a credit card

These days, it often seems unnecessary to carry cash or even your checkbook, as credit cards are accepted just about everywhere. Though you might not realize it, however, paying with plastic can cost you. Some merchants add an extra surcharge or convenience fee onto each credit card transaction, effectively penalizing you for using your credit card.

Below are some payments you might want to rethink using your credit card for.

1. Overseas Purchases

If you’ve never traveled internationally, you’ll be in for an unpleasant surprise when you realize that, with many credit cards, you’ll have to pay a foreign transaction fee for every purchase. Fees average about 3 percent, but can vary greatly by card. While 3 percent might seem small, it can add up very quickly when tacked on to each and every one of your purchases. Combat this issue by paying in the country’s native currency as much as possible, or opening a credit card that doesn’t charge foreign transaction fees.

2. College Tuition

College tuition might be one of the most costly expenses you’ll ever incur, but putting the balance on your credit card won’t help matters. Many colleges and universities do not directly accept credit card payments, due to pricey processing fees, but they do allow you to pay through a third-party vendor.

However, you’ll be forced to pay a surcharge, typically around 2.25 percent. The best way to avoid this fee is to write a check, but if that’s not an option, you’re better off taking out a Stafford loan. Not only are interest rates lower, you’ll also be able to create a customized payment plan that fits your budget — neither is possible when using a credit card.

3. Small Businesses

Some retailers, often times smaller businesses, will add a surcharge onto your final bill if you pay with a credit card to offset the processing fees. These merchants are required to inform you of the fee prior to charging it and are not permitted to charge more than the merchant discount rate for the credit card transaction.

In fact, they’re never allowed to charge more than 4 percent. It’s important to note that there are laws limiting surcharging in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, Texas and Utah. Avoid this surcharge by keeping cash tucked away in your wallet to use when in this situation or pay with your debit card.

4. Rent

If you want to put your rent on your credit card to rack up rewards points or because you haven’t received your paycheck yet, you might be in for an unpleasant surprise. Many rental companies charge a convenience fee for making a rent payment online. This is a fixed amount that doesn’t change, even if the size of your bill fluctuates. If you have the funds in your checking account, it’s best to simply write out a check to give to your landlord each month, so you’re not stuck with added fees on top of your rent payment.

5. Parking Tickets

There are few things in life more frustrating than returning to your car and finding a parking ticket tacked onto the windshield. Unfortunately, that parking ticket often gets even more expensive if you opt to pay it online using a credit card, as many municipalities charge a convenience fee to offset the processing charge. Skip the processing fee by writing a check and mailing it in or heading to the parking authority to pay the fine in person.

6. Movie Tickets

Don’t want to wait in line for tickets at the movie theater? Easy, purchase tickets from Fandango! However, you’ll have to pay a convenience fee for this luxury, which is usually about $1.25 per ticket. If you’re less-than-thrilled about paying even more for your movie ticket, simply get to the theater early, buy your tickets, then head out to dinner before the show — no risk of encountering a sold out movie.

7. Federal Income Taxes

If you’re like most people, you want to get your income taxes paid as quickly and easily as possible — which might mean heading to your computer and paying online with a credit card. However, you should be aware that the third-party processing companies used by the IRS charge a convenience fee for this service, based on the total amount of your payment. Avoid this fee by writing a check and sending it into the IRS. Just be sure to allow yourself plenty of time, so it’s postmarked by the due date.

Using a credit card to pay for goods and services is typically the most convenient method, but not always the cheapest. Before automatically defaulting to plastic to pay for your purchases, make sure the merchant won’t charge you extra for doing so.

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