It can be tempting to swipe your credit card if money’s low and you need to cover a financial emergency. Or, maybe you want to grab an item that’s on sale or rack up travel points for your next international excursion. While these may all seem like valid reasons to use your credit card, you may be better off using a debit card or cash to make purchases. Here are eight times when it doesn’t make sense to use your credit card.

1. You don’t have funds in the bank for the purchase. 

When using your credit card, the first rule of thumb is only to swipe if you have the funds in the bank to cover the purchase. It doesn’t matter how badly you want the item, how great of a price it is, or how many rewards points you’ll earn. If you can’t afford to pay for the purchase outright, you probably have no business using the credit card. 

Why so? Credit card interest can get out of hand rather quickly if you don’t pay off the balance before the grace period ends. Plus, only making the minimum payment could cost you hundreds if not thousands in interest over time.

Another issue with using a credit card without having funds on hand for the purchase is the risk of default. If you run up your credit card balance and are unable to make the minimum payment, interest isn’t the only thing you’ll have to worry about. Your credit score will likely take a hit, and the debt collectors could start calling you sooner than later.

2. You’re out on the town and have had a few. 

During your much needed night out on the town, you put back a few drinks, cover the tab on your credit card, and it goes downhill from there. As the night progresses, your judgment becomes more and more cloudy, and you swipe away without a second thought. But reality sets in the morning after, and you’re devastated when you see your credit card balance.

A better idea: leave your credit card at home the next time you head out for a night of fun with friends. You’ll avoid the temptation to overdo it with your spending. 

3. You’re binge shopping to make yourself feel better. 

If you had a bad week at work, you might feel like you’re well overdue for some retail therapy, sponsored by your credit card. 

It sounds like the perfect plan, especially if money’s tight. But, it’s much more sensible to set a budget and use cash or your debit card to fund your retail therapy session. Otherwise, you could run up the outstanding balance on your credit card and spend way more than you should in interest if you can’t afford to pay it off right away. 

4. You’re living paycheck to paycheck. 

When you’re living paycheck to paycheck, and something comes up, it’s easy to whip out your credit card to handle business without thinking twice. But over time, that small monthly payment could grow until it becomes unaffordable. 

You can avoid this problem by putting your credit card away and building your emergency fund to cover those financial emergencies. Start by cutting expenses to free up money in your budget, or find other ways to earn side income. 

5. You’re struggling with credit card debt. 

Credit card debt is easy to get into and may seem practically impossible to get out of. And if you’re struggling to make the minimum payments on your credit cards, you know this firsthand. So, you should probably sock those pieces of plastic away in a desk drawer instead of making the problem even worse. You’ll eventually get over the hump, but you don’t want to add insult to injury before getting started. 

6. You already have a debt-payoff plan intact. 

Paying off debt credit card debt requires you to be laser-focused and committed to staying the course, despite what comes up. That’s why it doesn’t make sense to use your credit card if you already have credit card debt. Doing so could delay your debt payment progress. That means it could take longer to reach the finish line. 

7. You’re applying for a mortgage soon. 

When applying for a mortgage, your income and credit play a significant role in whether or not you’ll qualify for funding. But there’s another integral component of the evaluation process: your debt-to-income ratio, or the percentage of the debt you have in proportion to your earnings. 

Mortgage lenders like to see this figure at 43 percent or lower. And by making excessive purchases on your credit card, you run the risk of being turned down for a home loan. 

8. You’re trying to improve your credit score. 

It’s crucial to make timely credit card payments each month as payment history accounts for 35 percent of your FICO score. However, it’s equally as vital to keep your outstanding balances low or at zero to strengthen your credit score since your amounts owed account for 30 percent of your score.

Your debt utilization ratio plays a significant role in this calculation. If you continue to use your credit card each month without paying the balance in full, you may find it challenging to improve your score. Or you run the risk of your hurting your score.

Final Thoughts 

There are times when it doesn’t make sense to use your credit card. By using a debit card or cash instead, you’ll save yourself the headache of charging more than you can afford and paying interest on your purchases.

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