5 Instances When You Shouldn’t Use Your Credit Card

You may use your credit card for small expenses like buying coffee in the morning or paying a utility bill. These situations can be the perfect expenses for your credit card because they won't run up your balance too much, you can easily pay them off and you'll be building credit wisely. Even if you're a seasoned credit card holder and have your budget down to an exact science, you should avoid using your card in a few places. Improper charging can lead to hidden fees and high interest charges, and can result in your credit score being hurt. Here are a few situations when you shouldn't use your credit card:

College tuition
You don't need to be told that paying for college is expensive, so you should refrain from using your credit card to pay for this. Building credit properly and only using your card for emergencies, such as buying a textbook at the last minute should be your main goals during this time. If you use a huge chunk of your limit to pay for part of your tuition, you won't have an emergency fund to go to, and you'll be paying off your balance for longer than you initially wanted.

Student loans are one way to pay for your tuition, but when it comes time to repay them, don't use your card. Your loans are designed to be paid off over a longer period of time and have flexible repayment schedules. Paying off a high level of debt like student loans with your card can raise your credit-utilization ratio as well. Talk with your student loan lenders and see if you can work out a payment plan with them. Some offer income-based plans or biweekly ones, where you have more payments, but they are smaller.

Medical bills
When stuck with an expensive hospital bill, you may be concerned with how you're going to pay it off. Using your credit card to get out of this situation seems like an ideal choice, but you shouldn't go this route. See how much your health insurance will cover, and if you need a little extra help, negotiate to get a lower fee or flexible repayment option. It is imperative that you stay current on these payments, because if you default on your bills, your credit score will be damaged and the debt could be sent to collections, which will stay on your credit report for seven years.

Even if you only have to pay $100 back to the IRS, keep your credit card in your wallet. The IRS charges fees for credit card payments. These fees are generally 2 percent of your return, and if you have to pay back a big sum, the charge could be larger.

Investigate whether the IRS offers any payment plans or if you can negotiate debit card fees, which will make the repayment a bit easier.

Buying a car
In some instances, businesses won't even take your card as payment. One of those instances is car-buying. Credit card companies can charge fees for new car purchases, which will be expensive for you and an inconvenience for car dealers.

Big purchases
Using your credit card to make a major purchase, such as for a TV or vacation, can be alright if you have a game plan to pay off the expenditure. But if you are in a pinch or don't know how you're going to pay for one of these expenses, keep your card at home.