Posted by Brandon Weaver on Mon, May 06, 2013 @ 07:07 AM
Credit cards can be convenient, but they can't buy you everything. Two memorable taglines are American Express' "Don't leave home without it" and Visa's "It's everywhere you want to be." In reality, there are many high and low-ticket items that businesses prohibit consumer credit purchases. Retailers are required to pay a percentage of each transaction to the issuing credit company. Even with the convenience of plastic, Business Insider details the following items cannot be purchased with credit cards:
1. Cars - Buying a new or used car is a big decision for many people. Not only because they will be driving it for years to come, but it is a large chunk of their budget as well. High interest rates discourage using credit too. The issuers of credit cards would probably love for you to place your down payment or pay it outright if your limit was high enough.
Good thing you can write a check!
I know I did when I bought my car. Needless to say, if you're hoping to get the American Express Centurion Card (the "black card"), don't count on monthly car payments to get you there.
2. College Tuition - It doesn't matter whether it's public or private education, costs continue to rise.
Plus, scholarships, grants and loans don't always cover the total cost. I am currently getting my MBA and would relish the idea of paying for my program with credit. With my credit card I am enrolled in a rewards program that allows me to redeem points for prizes such as iPads, flight miles or travel packages. Had this been allowed, I would have had two iPads, flown to Rome and back and cruised the Caribbean by now. This is probably smart for tuition to be disallowed since many students are thousands of dollars in debt upon graduation. Can you imagine if students were in credit card debt with interest rates upwards of 15%?
3. Items at Discount / Dollar Stores - On the other end of the spectrum of high-ticket items are these retailers. Just like auto dealerships, these businesses are required to pay a percentage of each credit sale to the issuer. This niche market's main competitive advantage are rock-bottom prices. They have continued to survive over the years on this simple premise alone. It's a trade-off: they don't allow credit cards but you only pay $1. If they allowed credit, you wouldn't be paying with just George Washington.
4. Lottery Tickets - Very few states allow lottery purchases on credit. This helps encourage safer and more responsible gambling habits, otherwise people would go wild on hitting that elusive bonus number and winning the whole sha-bang. Wow, can you imagine if people could buy lotto tickets with credit? With record powerball jackpots, players would have a field day swiping their card. Card issuers would be scared out of their minds! Luckily for them, most state lotteries prohibit these types of purchases in the first place.
5. Mortgages - If you thought buying a new car was a high-ticket item, then what's a mortgage? Just like cars and college tuition, this would be a quick and easy way to earn some quick reward points and be well on your way to Fiji. If banks allowed payments to be made on credit, there would be more insecurity and potentially even more debt.
The end result? Likely foreclosures. In the wake of the banking and loan crisis that crippled the economy, this is a scenario nobody welcomes. To this we say thank you to banks and credit unions for not allowing these charges.
With many payment options, sometimes consumers resort to credit more often than they should or think they can. The preceding list is abbreviated and many other products and services cannot (and should not) be purchased with credit. This just goes to show that you can leave your MasterCard at home and Visa isn't exactly everywhere you want to be. Being in the payments industry for 30 years now and witnessing the evolution of payments, we don't see credit cards being accepted for these items anytime soon.
What do you think?