Special Report

10 Ways You Should Never Use Your Credit Card

There are few marketing slogans more seductive than “buy now, pay later.” Instant gratification. Getting something you cannot afford with nothing but a promise and a signature (and these days often not even that) — who can resist?

Historians believe that the Sumerians invented the concept of credit, around 3000 B.C. Interest on loans was typically paid with livestock — a loan of 30 head of cattle would be repaid with 31 or more. We have come a long way since then. Today, we use plastic for everything from bagels and lattes to first-class tickets to Australia (and probably sometimes livestock too), and pay interest — sometimes quite a bit of interest — in dollars and cents.

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According to credit reporting bureau Experian, the average American has 3.1 credit cards and maintains an overall balance of $6,354. Total credit card debt in this country is now about $829 billion, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data. About 8% of the balances owed are now 90 days or more delinquent.

Clearly, we charge many of our purchases on our cards, and clearly we cannot always pay for them in a timely manner, if at all. While almost any kind of product or service can be bought with plastic — including some you would not expect — there are ways in which cards probably should not be used, even if it is possible to do so.

The key to sensible credit card use is to consider the potential interest costs and fees and compare them with alternate methods of financing; to research the potential effects of this particular credit card use on your credit rating; and to avoid charging something that you will not be able to pay for within a reasonable period of time.

For information on potentially problematic credit card uses, we consulted numerous credit reporting and financial advice websites, including Experian, Equifax, WalletHub, NerdWallet, The Street, Go Banking Rates, Credit Card Insider, and Credit Cards.com. We also drew statistical and other information from the Federal Reserve, the Federal Reserve Bank of New York, the Internal Revenue Service, the CIO Council, Standard & Poor, FICO, CNBC, Investopedia, and Forbes.

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