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6 times you must avoid using your credit card

Credit cards impart a confidence of being financially independent. You become self-assured about handling emergencies and can afford to dream big. You also get to enjoy exclusive privileges and discounts that your card offers. Despite its advantages, one must exercise caution and control when using credit cards. If you spend more than you can repay, you could invite trouble. Credit card interest rates are steep and could increase your credit card debt exponentially.

The good news is that you can easily avoid this situation. The key is to be mindful when swiping your credit card and avoid the below situations.

1. When you know you wont be able to pay the bill - A new phone in the market or a luxury watch has been on your radar for a while. The price falls well within your credit limit but you know you won’t be able to repay the bill if you go ahead with it. You also have other responsibilities to address. Avoiding such a purchase can save you many troubles. Maxing out your credit card or delaying your payments can affect your credit score. If your score slips once, it could take months or years of efforts to correct it.

2. Exceeding your credit limit - It is advisable to make a mental note of your credit card transactions. Overshooting your limit could invite substantial interest rates on the excess amount. You can call the customer care and inquire about your remaining balance if you are unsure.

3. To make you feel better - For most of us, retail therapy is a way of overcoming our emotional turmoil. While it is all right to indulge occasionally, knowing when to stop can make a huge difference. Shopping provides momentary happiness but repaying debt is often more deep-rooted. You can look for alternative options like developing a hobby, hanging out with friends or reading to take impulsive shopping off your mind.

4. When you inebriated - Alcohol can hamper one’s decision-making capabilities. An intoxicated individual may not be able to think through the situation and could do something regrettable under the influence of alcohol. Under such circumstance, it advisable to keep the credit card at home if the plan is to visit a pub or go drinking with friends or colleagues. This way you can reduce the chances of overspending on alcoholic beverages

5. When you are suspicious of the person or the device - Credit card frauds are real and can affect when you are least expecting it. To clear one’s name out of fraudulent credit card transactions can be troublesome. It is advisable to be cautious before handing over your credit card to another person. You could try making your payments in cash or through a digital wallet.

6. When you have to apply for a loan - Lenders like to see their money going into safe hands. They may want to avoid individuals with outstanding credit bill payments in their name. It may be a good idea to delay your big-ticket purchases until after you get the loan.

A credit card may be a little piece of plastic but can affect your life in many ways. By avoiding swiping your credit card for every purchase can ensure you control your spending and limit your debt.