Six things you should NEVER buy on a credit card

CREDIT cards can be a convenient way to spend, but are used incorrectly and can end up costing you money.

Paying for the wrong things using your card can really take a toll on your finances – as well as your credit score.

There are some things you should never put on a credit cardCredit: Getty

Prices for household necessities, food, fuel, travel and energy bills are all skyrocketing right now.

This means millions of people could lose out or be unable to cover bills – and may seek credit to survive.

While this may be tempting, there are some things you shouldn’t put on your credit card – and something you should do.

It’s important to note that it’s not a good idea to throw cards just to survive.

You could be worse off if you can’t pay it back and that could impact your ability to take out loans in the future.

We spoke to the experts at Experian credit agencies and put together a list of the top things you should always avoid paying with a credit card, and the things you should avoid.

Six things you should never put on a credit card

1. Everyday is not important

You shouldn’t pay for everyday items like takeaways, clothes, and nights out on your credit card – unless you can pay it off.

James Jones, head of consumer affairs at Experian said: “Using credit to pay for groceries is usually unwise unless you can pay off the balance at the end of the month.”

That’s because unless you pay off the full amount at the end of each month, you will be charged interest.

This means you could end up with debt that you can’t pay back.

Instead, it is best to spend within your means and you can do this in a number of ways, the easiest of which is budgeting.

By looking at your monthly income and factoring in how much you have to spend on important things like food, rent, insurance, and bills, you can see how much is left over and give yourself a spending figure for each week.

Apps like Money Dashboard and Monzo can tell you where you can afford to put away your money each month and give you a better idea of ​​what you can spend.

A Sun reader recently shared how he managed to save £2,600 in just one year with the help of money-saving app Plum.

2. Household bills

Using your card to pay for monthly or annual payments such as energy or water bills is not a good idea.

James said it was “unsustainable” and would likely lead to financial problems later on.

That’s because these bills will just keep popping up month after month and if you keep borrowing to pay them off, you’re just adding more debt.

This can be a dangerous habit to get into and can have a negative impact on your credit report.

On the other hand, if you’re really struggling to pay your household bills, there may be help available to you.

For example, energy suppliers and governments are providing assistance in a variety of ways now that costs are soaring.

Millions of households have received £400 off their energy bills since last year and there is a final £67 payment coming this month.

Meanwhile, the government pumped a further £842 million into the Household Support Fund after March 31 which the council provided to help with costs.

These grants are provided by your energy supplier and there are several available.

For example, British Gas is offering £1,500 in support to customers in need through the British Gas Energy Trust.

Water companies are increasing their support for low-income households to £200 million, according to Water UK.

3. Mortgage and other credit payments

“It’s also not advisable to use your credit card to pay for important things like mortgages or rent payments and loans,” says James.

This is because you may run the risk of getting into more debt.

This also includes paying off other credit cards, car financing, or Buy Now, Pay Later payments.

James said: “Using credit to pay for other credit comments is rarely wise and often a sign of financial distress.”

High interest or late fees can cause more debt to be added, making it more difficult to repay.

This means that a credit agency looking at your credit score may delay giving you further loans because it makes you appear financially unstable.

Instead, you should focus on spending within your means and budgeting for expenses like these.

If you’re worried about paying back a large loan like your mortgage, it’s always best to talk to your lender first.

It’s best to do this before you know you won’t be able to meet your monthly payments, and not after.

After you talk to your lender, see how you can minimize your monthly expenses.

We spoke to mortgage experts about things you should do if you’re having trouble paying your mortgage.

4. Tax for the self-employed

If you are self-employed, you should also avoid paying your self-assessment tax bill with a company credit card.

That’s because there are built-in fees for corporate credit or debit payments.

Fees are non-refundable so you won’t get them back.

There’s no fee to pay with a personal debit card, so we recommend using this instead.

James says: “To use a credit card instead of a debit card, is like paying taxes for the self-employed – always use the cheapest way of payment if you can, to help you keep more money in your pocket.”

5. ATM withdrawals

While perfect for one-time emergencies, cash advances by credit card are likely to incur a fee, making them an expensive way to get cash.

Any cash advance like this will be marked on your credit report.

This could mean you are seen as “high risk” by the lender.

James said: “Cash withdrawals on credit are not recommended as you will usually be charged around 3% of the amount you take out.

“And if you do this frequently, it can make lenders careful when you apply for credit because they will be able to see that you have cashed out with your credit card on your credit report and may see this as a sign of financial distress.”

Instead be sure to withdraw cash from an ATM using your debit card and make sure you have enough in the bank to do so.

Be sure to find out what the overdraft fee is if you really go over what you have.

6. Buying foreign currency

Similar to making ATM withdrawals, buying currency with a credit card can trigger fees.

So when you’re spending cash on a vacation or trip, it’s best to use another payment method that avoids these fees.

This could be using a debit card or exchanging cash.

Things you have to put on a credit card

1. Purchases over £100

“Used responsibly and carefully, your credit card can be used to make a variety of purchases ranging from clothing to larger items like vacations and technology which can bring you several advantages,” says James.

For example, customers are protected under Article 75 of the Consumer Rights Act if you pay for goods that cost more than £100 and less than £30,000 using your credit card.

That’s even if you just paid a small deposit on your card.

This is because Article 75 was enacted to help consumers if something goes wrong.

James adds: “So your credit card company is just as responsible as the retailer or travel company to assist you in the event your item arrives damaged, or the airline goes bankrupt.”

2. Routine expenses

If you have gift or cashback cards and use them frequently for purchases like food shopping or larger expenses like vacations, you can earn rewards.

For example, some schemes offer money off your next store or a discount on your next vacation.

“Before making this purchase, however, make sure you can repay your expenses, so you don’t save the problem for the future,” warns James.

These loyalty rewards can really add up and if you avoid paying any interest fees it can go a long way, says James.

3. Purchases abroad

James says that certain cards, which charge no fees for foreign currency transactions, can be a great way to get good exchange rates.

These are usually travel-friendly credit cards like Halifax Clarity and Barclaycard Rewards Visa.

This means that while you are abroad, you have access to good deals on exchange rates.

If you are struggling to pay off credit card debt

Before making any application for a credit card, it is important to first check your eligibility.

You can do this on comparison sites including Experian, where soft searches are listed that won’t affect your credit score.

If you find yourself in a position where you are unlikely to be approved, you can take steps to improve your credit score or explore other options.

Here are six easy ways to improve your credit score.

If you find yourself with unmanageable debt or are unable to pay all of your monthly bills, it is important that you speak to the creditor or service provider concerned as soon as possible to see if they can help.

James says: “You may also find that debt charities like StepChange and National Debtline can offer valuable guidance or support on the right options for getting back in control.”

Do you have a money problem that needs sorting? Contact us by sending an email to [email protected]

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