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Times Not to Use a Credit Card (2023)

Triston Martin

Dec 04, 2023

Credit cards might rank among the most rational and secure payment methods when utilized appropriately. Numerous factors make using a credit card more preferable than using a debit card or cash. Stronger fraud prevention measures are offered by credit cards (and sporadically by purchase safeguards as well). If you lose your credit card, unlike with cash, you can phone the credit card company to get a replacement. Credit cards may also boost your credit score and net you beneficial rewards if you use them responsibly.

Despite all the advantages a credit card could provide when used properly, there are some instances where it would probably be a better idea to utilize another form of payment. You shouldn't use a credit card in the following five situations and outcomes, which are listed.

When You're Trying to Get Rewards

The primary attraction of reward credit cards is the chance to accrue miles, points, or cash back. It might be a good idea to keep your credit card in your pocket if you are tempted to make a purchase solely to earn more rewards or qualify for a welcome bonus. It's possible that following incentives could result in overspending, which will damage credit and cause financial issues.

Even if you have the funds available to settle the amount straight immediately, you should exercise caution when using your credit card to pay some payments. When you pay using a credit card, some creditors could charge you more. Depending on how many miles you travel, a processing fee (about 2%–3%) might not be as beneficial as the extra benefits you would receive.

When Submitting a Loan Application

When you apply for financing, the lender might run a credit report, especially if it's a bigger loan like a mortgage, to find out how much money you owe to other creditors. Large credit card balances, even if they are just temporary, may raise your debt-to-income (DTI) ratio and lower the amount you qualify for in a new loan.

Your credit utilization ratio is another issue with having a sizable credit card amount prior to loan application. Keep in mind that using your credit card to the maximum limit lowers your credit score.

When You Are Unable to Afford to Pay the Balance in Full

The greatest credit card usage strategy is to pay off the entire balance on your statement each payment cycle. Generally speaking, it is best to avoid charging something to your account in the first place if you know you won't have the money to pay for it by the time your next credit card payment is due.

The majority of credit cards have grace periods. On the majority of credit cards, you can save money by paying off all of your expenditures from a billing cycle before the due date. This year, as a result of recent Federal Reserve rate rises, the average credit card interest rate has been increasing. As a result, it is crucial now more than ever to pay off your credit card debt.

However, if you carry an amount over to the next month, you will start to accrue astronomical interest fees (unless you're using a credit card program with a 0% APR). Your decision to cycle a balance will cause you to accrue more credit card debt in the future.

When calculating your credit score and your credit utilization ratio (also known as your credit score), credit scoring models like FICO and VantageScore take into account the credit card amount that is listed on your credit report. How you use credit accounts for 30% of your FICO Score, and your VantageScore credit score is significantly impacted by this element as well.

When You're Unable to Make Your Minimum Payments

If it's tough for you to make the minimum payments on your credit card balances, there's another indication that it might be best to put the cards on hold. The minimum payment is the lowest sum that you can send to a credit card company to avoid having your account go past due. However, making minimum payments won't help you pay off your debt and can potentially worsen your financial situation and credit score.

As soon as you recognize you're having problems paying more than the minimum amount owing on your credit cards, it's critical to create a plan. You might think about consolidating your debt with a personal loan or a credit card with a balance transfer, depending on your particular circumstances. Discussing additional choices with a qualified credit counselor could be helpful if you feel overwhelmed.

When You’re Making Purchases on Behalf of Others

A wonderful approach to increase your points, miles, or cash back is to use your rewards credit card to make a purchase and then request a refund from friends or relatives. This tactic, however, may backfire if you pay for a transaction in advance and the other parties don't honor their pledge to pay you back.

Only use your credit card to pay for an expense if you are certain the person who promised to reimburse you would carry through on their promise (or if a refund is feasible in the case of bookings made in advance). Normally, you face the risk of racking up interest on debts that you wouldn't be able to settle.


When purchasing purchases or even making certain regular monthly payments, credit cards are usually a better option, especially if you can do it without paying interest and receive valuable rewards in the process. But it's important to be cautious when using your credit card to make a purchase. You run the danger of collecting hefty interest charges or, even worse, damaging your credit rating going future if you use your credit card to make a payment at the incorrect time.

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