When to use your credit card (and when not to)

Want to become a savvy credit card user? You have come to the right place. This article explains when to withdraw your credit card and when to keep it hidden.

We will also talk about surprising places that do accept credit cards, as well as a few places that do not. Use this handy guide to make sure you always know how to answer the question: “And how are you going to pay today?”

When to use your credit card

There are a few situations where using a credit card can pay off big time. Before you get too enthusiastic, remember two important caveats:

  • Be sure to check your credit card policies before going this route. Not all credit cards are alike.
  • If you don’t pay off the entire balance at the end of the month, this seemingly innocent purchase will end up costing you dearly.

Expensive items

Throwing that big-screen TV on your credit card might seem a bit risky, experts say, but it might actually be the smartest move. Here’s why: Most credit card companies offer certain protections that can be useful when making large purchases. These include fraud protection, as well as the ability to dispute charges in the event of an error. Some credit cards even offer automatic extended warranties on certain purchases. A large purchase can go a long way toward your rewards total if you have a rewards card.

Other credit cards offer introductory periods of 0% APR for new purchases for 9 to 21 months. This means that if you make a large purchase, you can pay it off for a fixed period of time without earning interest. It’s a great way to save money on any major planned purchases.


Many hotels use credit cards to make reservations. There’s another reason you might want to use your card to book travel: check to see if your credit card includes secondary travel insurance. Another bonus? Some travel rewards cards offer additional rewards for travel-related purchases.

Also: Best Marriott Credit Cards: Enjoy Extra Travel Perks

Purchases made online

Many protections are in place for online shoppers using credit cards. Some cards also offer additional coverage in case the item arrives damaged or does not arrive at all. Make sure you are shopping on a secure site and be sparing with your personal information.

When you shouldn’t use your credit card

On the other hand, there are a few instances when using a credit card is a bad idea. Consider the following:

Student loans

It’s an expensive item, right? Still, the expensive item clause only works when you can pay off the balance at the end of the month. Since student loans are inherently repaid over time, credit cards are not the ideal tool. Even with rising interest rates on student loans, these interest rates are still lower than most APR credit cards.

Also: How to build good college credit

Medical bills

Medical bills can be overwhelming, and sometimes a credit card is the best option. However, be sure to talk to your healthcare provider or insurance company first; many offer payment plans that will keep the overall cost lower than interest-heavy credit card payments.

Anything that will inspire you to carry a balance

The biggest no-no when it comes to credit cards is spending beyond your means. If this big splurge means breaking your budget and carrying a sale, ask yourself if it’s really worth it.

Surprising reasons to use your credit card

Here are a few cases where, contrary to popular belief, the use of a credit card is actually encouraged:

To rent

Many landlords are increasingly willing to accept credit cards for rent. There are several reasons to consider this option. First, it helps build your credit. Second, this option allows you to make instant payments (no postage or courier delays). Finally, you may be able to earn rewards.

Monthly invoices

You might want to see if your gym membership, cable, cell phone, or utility bills can be placed on a credit card. In some cases, you can even schedule automatic monthly payments. This not only helps with budgeting and keeping up to date on payments, but it can also provide the same benefits described in the rent section above.

As always, this option works best if you’re a budget star who plans to pay off the full balance each month.

Also: How to create a budget with your credit card

Purchase you probably can’t make with your credit card

Credit card issuers typically charge retailers and service providers a fee, which is why some places, especially small businesses, simply won’t accept cards. There are also a few other categories of purchases where your credit card won’t be welcome:

New cars

These credit card company fees are on top of buying a new car, so it’s no surprise that most car companies don’t accept credit cards.

Also: Can you buy a car with a credit card?

Lottery tickets

This time, it is the card issuers who prohibit purchases. Some card issuers specifically prohibit the purchase of lottery tickets (but others allow it). Check with your card.

Tuition fees

We’ve discussed the dangers of putting student loans on a credit card; if you pay directly to the school, they are unlikely to take your card because of the fees.

Gambling chips in a casino

Let’s be honest: it’s a good thing that casinos don’t accept credit cards in exchange for gambling chips. This could lead to heavy losses multiplied by high interest rates.

[This article was first published on The Simple Dollar in 2020. It was updated in March 2022.]

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