Credit cards offer convenience and rewards. However, sometimes, swiping your card can do more harm than good. Whether you’re trying to avoid unnecessary debt, protect yourself from fraud, or simply make smarter spending choices, knowing when not to use your credit card is as important as knowing when to use it. Here are 12 situations where putting your card back in your wallet is the best move.
Cash Withdrawal From ATM
While withdrawing cash from an ATM using your credit card might seem convenient, it can come at a steep price. Most credit cards charge high interest rates on cash advances, and these transactions don’t qualify for an interest-free grace period. This means you start accruing interest on cash withdrawals immediately.
Cash advances often come with extra fees, making them significantly more expensive than simply using a debit card or finding other ways to access cash.
If You Can’t Afford To Pay The Balance
Using your credit card for things you can’t afford to pay off is risky and can add to your existing debt and damage your credit score. If you consistently carry a balance without the ability to pay it off, interest charges can quickly spiral out of control, making repayment even harder.
In extreme cases, creditors may argue fraud if you knowingly swipe your card without the means to repay, which could impact debt discharge in bankruptcy. To avoid financial trouble, it’s best to only pay for things you can comfortably afford to pay back in full each month.
There Is A Costly Transaction Fee
Credit card transactions often involve fees that merchants may pass on to customers. These fees include general transaction fees and foreign transaction charges, which can add up, especially for large expenses like taxes and rent. To minimize costs, use alternative payment methods like cash or cards that waive foreign transaction fees.
Emotional Spending
Using a credit card to shop to cope with emotions can lead to overspending and financial stress. Instead, consider healthier alternatives like exercise, journaling, or addressing the root cause of distress. If shopping becomes a frequent escape, seeking professional guidance may help manage emotions and finances more effectively.
Paying Taxes
Don’t use your credit card to pay taxes. Using a credit card for tax payments can come with high processing fees that outweigh any rewards earned. IRS payment plans may offer better rates if you’re financing unpaid taxes.
For online payments, opting for a debit card can be a more cost-effective choice, as it incurs a flat fee rather than a percentage-based charge. Consult a tax adviser to help you determine the best approach for your financial situation.
When You Are Drunk Or Hungry
Impulse spending can be risky when you’re hungry or intoxicated. These moments can cloud judgment, leading to unnecessary expenses and growing credit card debt. To stay financially responsible, avoid shopping on an empty stomach and limit access to funds when drinking.
To Earn Credit Card Rewards
Don’t spend more than necessary just to earn credit card rewards. Even the best perks aren’t worth blowing your budget. Instead of chasing points, focus on the real benefits they bring.
A smarter strategy is using your credit card for everyday expenses like fuel, groceries, and essentials, not impulse buys. Maximize rewards while keeping your financial health intact. Spend wisely and don’t let rewards dictate your purchases.
Check Credit Before Swiping
Before swiping your credit card, check your available credit. It could save you from declined transactions, surprise fees, and even higher interest rates. If you’ve opted into over-the-limit protection, your issuer might let you spend past your limit, but that could hurt your credit score and make repayment harder.
A maxed-out card is tough to manage, so stay informed about your balance to avoid financial headaches. The CARD Act of 2009, has helped several consumers avoid extra credit card fees.
If The Card Reader Looks Suspicious
Always stay vigilant when handling your credit card. Fraudsters can install skimming devices on ATMs, gas pumps, and payment terminals to steal card information. If a card reader looks misaligned, loose, or has broken security seals, it could be compromised. Report suspicious devices and avoid using them to protect your financial security.
If You Are Applying For Mortgage
Keeping your credit card balance low is crucial when applying for a mortgage. Lenders assess your credit utilization and debt-to-income ratio, so large credit purchases can hurt your chances of approval.
To avoid financial complications, hold off on big credit card expenses until after the mortgage process is complete—and ideally, wait a few months to adjust to new housing costs.
At Street Fundraisers
Be mindful when donating to street fundraisers. If they ask you for your credit card details without a secure payment system, your financial information could be put at risk. Instead, opt for cash or visit the organization’s official website to make a secure contribution. Ensuring safe transactions protects both your funds and your generosity.
To Pay Tuition
Paying tuition with a credit card might seem convenient, but it can cost you more in the long run. Credit cards carry higher interest rates than student loans, and many colleges add extra processing fees for tuition payments made with a credit card.
Unlike student loans, credit card debt isn’t tax-deductible, and repayment options are less flexible. If covering tuition feels challenging, explore financial aid or alternative funding sources through your college’s financial aid office—it could save you money and stress.
