7 Times You Shouldn't Use Your Credit Card

If we all put a little more thought into using our credit cards, perhaps there wouldn't be such a big problem with credit card debt. U.S. credit card debt topped $1 trillion for the first time in early 2018 and the amount of outstanding credit card debt continues to increase each month.

Just because your credit card issuer gives you access to a sizable credit line and just because there’s something you want to buy doesn’t mean it’s a good time to use your credit card. Here are a few times you should leave your credit card in your wallet instead.

Don't use your credit card when you can't afford to pay the balance.

hands exchanging credit card for shopping bag through computers

This is arguably the number one time you shouldn’t use your credit card. If you can’t afford to pay for a purchase in cash, then you really can’t afford to put it on your credit card.

If you swipe your card knowing you can’t pay back what you bought, you could be guilty of fraud. You may not necessarily be arrested, but some creditors may use the fraud argument to keep you from bankrupting that debt later on down the road.

Charging things you can’t afford is the surest way to get into debt and ruin your credit score.

Think twice about swiping when you don't know your available credit.

Many of the major banks have eliminated the over-the-limit fee and some have even replaced credit limits with spending limits, but that doesn’t mean it’s ok to exceed your credit limit.

If you’ve opted-in to have over-the-limit transactions processed, you could trigger an interest rate increase by going over your limit. Not only that, maxed out credit cards are bad for your credit score and are the most difficult to pay back. Always confirm your available credit before using your credit card.

Avoid credit card purchases when you're applying for a mortgage.

Mortgage lenders frown upon big credit card balances when you’re applying for a mortgage. The more credit card debt you're carrying, the harder it will be to qualify for a mortgage because that also means you may have a hard time making mortgage payments.

It’s best to save big credit card purchases at least until after you've completed the mortgage process. It's even better to wait a few months after you've closed to get adjusted to having a mortgage and other housing expenses.

Don't use your credit card to make yourself feel better.

You could easily end up overspending if you’re swiping to cure the blues, especially since shopping is just a temporary fix for a deeper issue. Look for cheaper ways to solve emotional dilemmas, like running, bicycling, or gardening, or solving the problem that’s keeping you distressed. Running up a credit card balance could backfire when you realize you don’t have the money to pay back the credit card balance.

Don't use your credit card when you already have debt.

It’s smarter to pay your existing credit card balances before you charge something else. Making new purchases before you’ve paid off old ones is an easy way to get into credit card debt. If you don’t know how much debt you have – shame on you! Time to pull out your credit card statements, tally up your balances, and come to terms with your indebtedness.

If it turns out that you have too much debt, put your credit cards away and work out a plan to start paying back what you owe.

Avoid using your credit card when you're intoxicated - or hungry.

Certain times you’re less in control of your decisions than others. If you’re intoxicated or even hungry, you could spend more than you’re able to pay back. Don’t shop when you’re hungry and only carry a limited amount of cash if you plan to drink. That way you can keep your purchases under control.

Don't use your credit card if you don't trust the person or device handling it.

With credit card skimming, thieves can steal your credit card information while you’re looking. Waiters and waitresses have been caught passing credit cards through a skimmer in an otherwise legitimate transaction. And fraudsters are known to have placed skimming devices on ATMs and at gas pumps.

You’re not liable for most fraudulent charges, but it’s still a pain to deal with. Don’t use your credit card if you think there’s a chance your card information could be stolen.