There’s no doubt that using credit cards can make life easier. When everyone from the flower vendor at the farmers market to your favorite food truck accepts plastic, it seems like a no-brainer to use your card for everyday purchases.
But it isn’t always. While earning airline miles and cash-back offers with credit card use is a definite perk, there are times when those perks — and the convenience — of paying with a credit card don’t outweigh the drawbacks. Whether or not you’re a first-time credit card user, you should protect yourself by steering clear of plastic in these five situations.
When You’re Shopping on Unsecure Internet Sites
You can find steep discounts online, and free shipping makes it a lot easier than hitting the mall. But before clicking the “confirm order” button, make sure you’re browsing a secure website.
How to know? The website’s address should start with https:// instead of http://. The “s” indicates that the site is encrypted and secure, so your purchases should be safe from hackers trying to steal your information.
Another tip: Take a second look at the URL. Does the site address makes sense, or does it appear as though it’s coming from a foreign entity? Unless you’re very confident in the legitimacy of the online store, it is best to avoid using your credit card on sites with addresses containing a country code (such as .ru, .au and .cz.).
When You’re Making an Expensive Purchase
You might be tempted to reach for your credit card for certain big-ticket items. And sure, there can be benefits to charging a new TV or couch, but make sure you have a plan to pay off these high-dollar purchases.
Think of your credit card as an unsecured loan with accrued interest on the balance if you don’t pay it each month. A good rule of thumb is that if you can’t afford the entire balance, then you should at least be able to pay off half the purchase within a month of the charge. You should then have a strategy for paying down the other half within six months. If this isn’t doable, this is the perfect example of when not to use a credit card. Save up and use cash instead.
When You’re Out on the Town
If you’re enjoying drinks with friends at a restaurant or bar, think twice about using your card to pay. In addition to running up a tab that you might not be able to afford, you may encounter an unscrupulous waiter with a skimming device that can steal your card information. It’s always safer to pay with cash if there’s a chance your card will be out of sight.
When You’re Nearing Your Credit Card Limit
Have you received a notice about the rates on your card increasing? It’s possible that your introductory annual percentage rate (APR) is almost up, but it’s also possible that you’re nearing your credit limit. A rate increase is a warning from the credit card company that they’re trying to deter you from using your entire spending limit. Work to pay down your debt before adding more charges to your statement.
When You’re Trying to Build Credit
If you’re using your credit card to build your credit, know that if you carry a balance from month to month, using your credit card could have an adverse effect on your credit score. A credit score is a prediction for how likely you are to pay your bills based on your history of paying bills and using credit responsibly. This is especially important to keep in mind if you plan to apply for a mortgage within the next six months to a year.
Plastic can make life easier — but it’s important to know when not to use a credit card. If you’ve made a few mistakes in the past and worry that your card numbers may be at risk, consider adding ID Theft Protection to your homeowner’s insurance for an added layer of security.