When should you avoid using a credit card, even if it seems convenient?

Using a credit card for miscellaneous payments is quite normal these days. Whether it's paying a bill at a restaurant, making travel bookings, joining a gym, or subscribing to video streaming services, credit cards are used by almost everyone.

But did you know that it is not recommended to use a credit card for all kinds of expenses? For example, when you want your credit utilisation to stay lower than 30%, it is not advisable to use your card. Similarly, when you have a bad habit of clearing your credit card dues after the due date, then too much reliance on credit cards is not for you.

These are some of the scenarios when credit card usage is not recommended.

Avoid using credit cards in these scenarios

I. When you are close to your credit limit: One reason to avoid using a credit card could be that you are too close to your credit limit. For instance, if your total credit limit is ₹5 lakh, and you have already exhausted ₹4.5 lakh, then it is better to first clear the existing dues before using the card.

II. Cash-equivalent transactions: Using a card for withdrawing cash from an ATM is a strict no-no.

III. When you can't pay the full balance: When you do not have the resources to pay the full balance immediately (i.e., within your card's monthly credit cycle), then you should refrain from using the credit card. It is better to save for a few months before you go ahead with spending. Additionally, making the minimum due is not a recommended thing to do.

IV. Big-ticket purchases without a plan: When you are set to use a credit card without having a pay-off plan, it is not recommended to use a credit card.

V. Transactions on dodgy portals: Another important point worth remembering is to avoid using your credit card for making payments on some dodgy websites. There could be some fraud waiting to happen.

Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.