When You Should And Shouldn’t Use A Credit Card


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Credit cards can be useful financial tools when used responsibly, as they offer convenience, rewards, and protection from fraud. Like any other financial product, however, there are times when it’s best to use cash or a debit card instead. Let’s look at the times when it makes sense to use a credit card versus the times when you should avoid using one.

When You Should Use a Credit Card

Credit cards can be beneficial in many situations. With that said, you should only use a credit card when you can pay it in time and avoid interest charges, or when you’re truly in need and those interest charges are worth it. Here are some scenarios when it might be a good idea to use a credit card.

To Get Rewards

Many credit cards offer rewards for everyday purchases such as groceries, gas, and online shopping. These rewards can add up quickly and can help you save money on future purchases.

The Upgrade Cash Rewards card allows you earn unlimited 1.5% back on payments. There’s no annual fee and credit lines range from $500 all the way up to $25,000.

Then there’s the Upgrade Triple Cash Rewards card, which earns a whopping 3% back on home, auto, and health categories — as well as a flat 1% on all other purchases. Like the normal Cash Rewards card, this card has no annual fee and credit lines up to $25,000.

With either card, you can earn a $200 bonus when you open a Upgrade Rewards Checking account and make your first three debit transactions!

To Build Credit

If you’re looking to build or improve your credit score, using your credit card regularly is one of the best ways to do it. Just be sure to pay your balance off in full each month so that you don’t incur interest charges that could negate any rewards you may have earned.

For Large Purchases

Using a credit card for large purchases may also offer more protection than paying with cash or a debit card, as most cards come with purchase protection plans that will cover certain types of damage or theft within a certain amount of time after purchase.

When You Shouldn’t Use a Credit Card

Credit cards aren’t always the right choice for every situation. Here are some times when it’s best to avoid using a credit card:

When You Can’t Afford It

In most cases, you should avoid using a credit card if you don’t have the financial means to pay off your balance each month. Carrying a balance from month to month will usually result in interest charges, late fees, and potential damage to your credit.

Impulse Buys

Unless you know that you’ll be able to pay off the balance in full at the end of the month, it’s best to avoid using your credit card for impulse buys. These might include clothes, electronics, or anything else that could get expensive quickly if not paid off right away.

Online Gambling or Casino Purchases

Most banks and lenders won’t allow these types of transactions on their cards due to their high-risk nature, so it’s best not to even try it in order to avoid potential fraud charges or account closures down the road.

Cash Advances

Cash advances should almost always be avoided since they typically come with higher interest rates than regular purchases. They may also include additional fees, such as an ATM fees when withdrawn from ATM machines.

What Is the Best Credit Card to Have?

When it comes to credit cards, there is no one-size-fits-all solution. The best credit card for you depends on your financial circumstances, needs, and spending habits. Of course, cashback credit cards offer the highest upside, as they allow you to earn rewards as you spend. You can find the top cash back credit cards here.

Should You Get a Credit Card if You Have No Credit History?

Yes, you should definitely get a credit card if you have no credit history. Credit cards are a great way to build your credit score so long as you stay aware and utilize it responsibly. You can raise your credit score by making small purchases and ensuring you pay on time. It also helps if you keep your credit utilization rate at 30% or lower.

Can You Improve Your Credit Score with Credit Card Usage?

Yes, as long as you pay your balance in full each month. Your credit score is determined mainly by your payment history and the amount of available credit you use. Using your card but staying within 30% of your credit limit is one of the best ways to establish healthy credit. This will help you get better interest rates on loans, mortgages, and credit cards in the future.

How Can I Make My Credit Card Payments on Time?

The key to using credit cards responsibly is to stay on top of your payments, as this will help you avoid interest charges and late fees. First, create a budget and ensure that your credit card expenses don’t exceed your income. Then, make a habit of checking your statement regularly so that you know where your money is going. Also, set automatic reminders or set up autopay plan so that your balance is paid off before the due date.

What Should I Do if I Can’t Afford to Make a Payment?

In case you can’t make a payment, contact your credit card issuer as soon as possible. There are several options that creditors offer — such as deferment, which allows you to push your payment to a later date — or a payment plan, where your debt is spread out into smaller payments over time.

The worst thing you can do is nothing. Failing to make payments not only results in bad credit but it can also lead to your balance being charged off and sold to debt collectors.

Should You Use Credit Cards for Daily Expenses?

The truth is that using a credit card for daily expenses is generally fine when you’re able to pay off your balance every month. This will allow you to take advantage of rewards programs and build your credit score. However, if you’re prone to overspending, it’s better to stick to cash and avoid bad debt and its potential ramifications.

Should You Use a Credit card for a Large Purchase?

It’s not advisable to make payments on your credit card over time. Carrying a balance from month to month leads to interest building up, creating a vicious payment cycle. You’ll end up paying more over time than the original purchase price. It’s better to save up money or look for alternative financing options such as personal loans.

Do Credit Card Rewards Programs Offer Value?

Rewards point programs can be a great way to get value out of your credit card usage. If you’re someone who frequently uses their credit card, you could take advantage of reward points offered by your card company. These points can be redeemed for travel expenses, gift cards, or even cash back. Some credit cards offer different rewards for different types of expenses, so it’s important to choose a card that rewards your lifestyle.

Can My Credit Card Be Hacked and How Can I Prevent It?

Yes, your credit card can be hacked, and it’s important to take necessary measures to prevent this from happening. Some ways to prevent hacking include keeping your card and its details safe and secure, creating strong passwords, and avoiding suspicious websites and emails. Additionally, always check your statement regularly to ensure no fraudulent transactions have occurred.

Can You Withdraw Cash from a Credit Card?

Yes, you can withdraw cash using your credit card, but it’s not recommended. If you take out cash on a credit card, you might have to pay a high-interest rate or transaction fees. The cash withdrawal interest rate is always higher than a regular purchase — as much as 2%–4% more. So, it’s best to use the card only for purchases, not to withdraw cash.

Should I Use My Credit Card Overseas?

It’s best to avoid using your credit card overseas if you’re unsure about the fees you’ll be charged. Some credit card companies have international transaction fees that add between 1%–3% to every overseas transaction. If you do use your credit card overseas, notify your bank so that they do not think there is fraudulent activity on your account.