Thanks to Marketplace (Heard on American Public Media, not to be confused with NPR), I learned that there are 10 purchases that should not be put on credit cards. While these purchases aren’t part of the criteria of FICO scoring, they can lead to the credit card issuer reducing your credit line which can impact your FICO score. Let’s review the list, and you can decide if it crosses the line of “big brother” or is just good business practice;
- Traffic Tickets – A ticket will already raise your insurance rates, they should be paid by check, not the credit card.
- Retreading your tires – this can seem like a frugal decision, but the card issuers feel it’s indicative of tight money, and this sets off a red flag for them.
- Bargain Binges – If you change your spending habits and suddenly begin shopping at the Dollar store or Walmart, you might see the issuer react. As with the tire retread, this can be a sign of tight money.
- Adult Playthings – No judgment here, not by me, anyway. But this is viewed as escapism by the card companies, and they think you are escaping financial worries. Not sure how they reason this, but that’s the claim.
- Marriage Counseling and Therapy – I’d think it positive that people try to work out their issues, but not the card companies. A divorce can lead to financial trouble, and counseling often precedes divorce.
- Lottery Tickets – well this makes sense, and I never thought you could even charge these.
- Cash advances – again, this makes sense to me. If you are struggling and need to use the cards to get by, short term, you are best off charging the normal expenses and conserving cash, but avoid the cash advance option off the card.
- Personal Pampering – So I decide to send my wife for a well deserved birthday trip to a spa, this might not seem so to the card issuers. They may view it as trying to reduce stress, stress from fear of job loss.
- Income tax – Again, charging an item you should be prepared to pay with cash is a red flag.
- Booze – Frequent bar visit are another red flag, so if it’s your turn to buy, stop at the ATM first.
Such a list raises new and troubling questions to me. Data mining has gotten out of control and has the potential to hurt the consumer. To prepare yourself for the impact from this, as well as the ongoing banking crisis, it’s a good idea to review your cards’ balances and to be ready to change your usage if and when your credit lines are cut.