15 Times When You Shouldn't Use Your CreditCard
by Marcia FrellickThursday, October 7, 2010 provided byThere are plenty of reasons to use a credit card — convenience, accountability and safety amongthem — but when is it better just to step away from the swiper?There are many out there who would say that there's never a good time to use a credit card, andthat cash, debit or anything else would be a better choice. While forgoing credit for good may or may not be realistic, there are some times when it is best to just leave the card in your wallet or purse. Here are some times when you should never use your card:
1. After midnight.
Paraphrasing Eric Clapton, after midnight tends to be when people let it all hang out —even financially. "After midnight is the time you getinto more trouble rather than making a sound financialdecision. If you're at a club or casino, just go home,"says Michael McAuliffe, president of Family Credit Management in Chicago. Put the card awayand take another look in the morning.
2. When you're near your credit limit
. "You don't want to be even within a couple hundred of your limit or your credit score will go down," says Mary Ellen Nicol, counselor with CredAbility inAtlanta. If you're getting too close to your credit limit, ask your credit card company to raise your limit, switch to a card with a lower balance or find another way to pay.
3. When considering an extended warranty at the car dealership
. You can probably get abetter deal if you roll the warranty cost into the car loan. Even though you may have a slightlyhigher monthly car payment that way, wrapping it into a secured loan likely still beats paying highinterest for it on your credit card, says David Johnson, bankruptcy counseling director atClearPoint Credit Counseling Solutions in Los Angeles.
5. If you're paying off one card with another, and it's a habit:
"If you're swapping your debtevery six months, that's going to show up on your credit report," Bowne says. If it's a one-timething, consider whether the offer is too good to be true. "Transfer fees have gone up at least apercent on average in the last year," Bowne says. "We're talking about 4 percent of your debtyou're going to pay up front just to transfer the debt." Be clear on the rate you will pay after thepromotional rate ends. It could be higher than the rate you're trying to escape from, she warns.
6. At a flea market
: "It used to be that you always had to have a wad of cash. Now, through themagic of technology, some guy selling rickety, old wagon wheels can take your credit card,"Williams says. This is the kind of purchase where convenience doesn't outweigh the risk, shesays. Bring the cash.
7. If you think you're building your credit history:
David Beddoe, counselor with AmericanFinancial Solutions in Seattle, says he hears that a lot. While your credit score goes up if you payoff the purchases you make, putting items on a credit card without paying them off will have theopposite effect on your score, he says