Have you ever done anything crazy with a credit card? Most Americans have, according to a new study conducted by Op4G on behalf of CardRatings.com. From weddings to weed, people charge the darnedest things. This would be mildly amusing if it were not for the tremendous cost. According to the Federal Reserve, credit card balances have been rising over the past three years, and now total nearly $857 billion. Adding to the problem is the fact that credit card rates never fell the way that mortgage rates did. The average consumer with a credit card balance pays 12.89 percent on that balance, meaning that Americans are paying in the neighborhood of $110 billion a year in credit card interest. Is it worth it? When you look at some of the things people buy, you have to wonder. Op4G surveyed 2,004 adults to find out what was the craziest thing they had ever purchased with a credit card. A majority of respondents -- 57 percent -- admitted to having made a credit card purchase they now think was a little crazy, though of course crazy is in the eye of the beholder. Here are some of the questionable purchases people made that seemed to make sense at the time:
- Adult entertainment. Lust can put you in a frame of mind to make foolish financial decisions -- 6.7 percent of survey respondents reported having used a credit card to pay for adult entertainment. The percentage was even higher among men, who are about four times more likely than women to use a credit card for this purpose.
- Scalped concert or sporting event tickets. "Scalped" may be an outdated expression, and people in that business prefer to be called third-party ticket resellers. However, when you layer credit card interest on top of the premium that tickets to must-see events often sell for, you might well feel that you've been scalped. More than 6 percent of survey respondents reported that they had used their credit cards for this purpose.
- A car. An automobile is often a necessity, but there are better options than paying for it by credit card, something 5 percent of survey respondents admitted to doing. The average four-year car loan rate is about 4.4 percent, or just over one-third of the typical credit card rate.
- College tuition. What's so crazy about the fact that 4.7 percent of respondents reported having used their credit cards to pay for college tuition? After all, a college education can be an excellent investment. However, you diminish the return on any investment if you pay too much for it, and a credit card is about the most expensive way you can pay for tuition. Student loan interest rates are typically much lower than credit card rates, and there are other forms of financial aid as well. Go to www.fafsa.gov to research your college financing options, and using a credit card should be at the very bottom of the list. (If you have a rewards card and the cash to pay off the balance before you accrue interest, though, this might be a smart move - but only if you pay it off.)
- Tattoos. It might seem reasonable enough that 3.3 percent of respondents used their plastic for ink -- after all, a tattoo is forever. Unfortunately, for too many Americans, so is credit card debt.
- A wedding. Yes, it might be the most important day of your life, but adding a fresh new chunk of debt is not the best way to start out your marriage. Nonetheless, 2.6 percent of respondents have used credit cards to finance a wedding.
- Bail. Using a credit card for bail money, something 2 percent of respondents reported doing, might seem preferable to spending the night in the slammer. Just make sure that running up credit card debt does not simply compound whatever problems landed you in trouble in the first place.
- A funeral. You can't blame people who find themselves caught in a position of having to pay for a funeral by credit card, which 2 percent of survey respondents reported doing. However, you can blame the deceased. A funeral is something everyone should provide for as they get older. Funeral homes routinely make it very easy to set up a burial trust for this purpose.