published July 08, 2020
ByAudrey N
Share this article

When Not To Use Your Credit Card

Credit cards are nothing if not convenient. We’ll give them that. There is no doubt that credit cards can come in handy and bridge a short-term cash flow crunch, but at the end of the day, they can get you into long-term trouble for a short-term gain. So, it’s wise to be as diligent as possible to avoid unnecessary fees and interest, especially in the situations below.


1. Withdrawing money from an ATM.

If you ever need to withdraw cash from an ATM, try to always use a debit card for this and ideally find an ATM machine from your own banking institution. You may be able to do this for no charge at all, meaning it won’t cost you any more than the face value of those bills.

Using a credit card at an ATM almost guarantees a high transaction fee – especially if you’re overseas. You may also incur interest on that cash advance right away, unlike your ordinary credit card purchases which could be interest-free up to a point.


2. Expensive purchases.

Some people think that credit cards are meant for expensive purchases. Technically, they allow you to get your hands on a “big ticket” item that you may have been unable to afford otherwise. However, you need to remember the interest rates associated with credit cards and factor that into the purchase.


Remember, you can always buy items with an unsecured personal loan which can have more reasonable terms. 

3. If you’re nearing the credit limit.

If you are close to reaching your credit card limit, your credit may be negatively impacted. Lenders may take this as a sign that you have more credit than you can handle and it could impact your ability to get a loan or future credit products.


4. Small everyday items.

Smart credit card consumers will only use a facility to pay for occasional, one-off purchases that can be repaid before the end of the following cycle. They’ll avoid using the card to pay for everyday items, especially if they intend to carry a balance going forward. If you’re in this situation, you may want to work on your monthly budget and cash flow projection and only use a debit card (or cash) for your everyday groceries and other purchases. Otherwise, you could rack up high-interest rates on essentials for no real reason at all.


If you want to use your daily purchases to help pay down your debt, have a look at Wisr App.


5. Purchases to gain reward points.

Reward points can be valuable in certain circumstances, but you really need to be careful if you are making credit card purchases simply to accumulate them. Although the idea of gaining points with your purchases seems quite appealing – think about how much those reward points are really worth. What can those points get you? Often people forget about their accumulated points and that they can expire. In other words, the value you may get from those reward points could end up being much less than the accumulated interest that you may have to pay.


Check your credit scores with WisrCredit.

If you use your credit cards responsibly, you can certainly maintain good credit scores. Head to your dashboard now and see where you stand.


DISCLAIMER: This article contains general information only, and is not general advice or personal advice. Wisr Services Pty Ltd does not recommend any product or service discussed in this article. You must get your own financial, taxation, or legal advice, and understand any risks before considering whether a product or service discussed in this article may be appropriate for you. We have taken reasonable efforts to ensure that the information is accurate at the time of publishing, but the information is subject to change. We may not update the article to reflect any change.
Did you find this content helpful?

Keep readingKeep reading

Make your week a little more interesting
Learn alongside thousands of Aussies who want to wise up about their finances.