Avoid Using Credit Cards in These Three Situations

Many people use their credit card for the security against fraud that other forms of payment can’t match.  In addition, many cards offer rewards points and miles towards travel, experiences, cash back, or merchandise – it’s like getting a return for your everyday spending!

However, there are many situations where someone should avoid using a credit card. Some are due to financial constraints and others are due to security concerns, such as scams. Would you know where and when you shouldn’t swipe or tap to pay? 

Before you break out that credit card, it’s crucial to know when using one makes the most sense. Here are three situations where you may want to pay with a different way – if you pay at all.

Avoid Using a Credit Card When You Can’t Pay Off the Balance in Full 

Carrying a balance on your credit card leads to interest charges, and interest can be very expensive. Interest on an unpaid credit card balance can quickly add up and become unmanageable. And if you’re paying with a credit card for rewards, those points or miles can lose their value quickly when you have to pay interest on your balance.

Sticking to a budget and only purchasing items with an intention to pay it off in full is the best strategy. You should also avoid paying with credit cards on unnecessary purchases if you’re already struggling with high balances. Adding more credit card debt if you’re already making high payments can make financial recovery even harder.

Avoid Using a Credit Card When a Merchant Seems Untrustworthy

Using a credit card – or any other form of payment – with questionable websites or businesses increases the risk of fraud and unauthorized charges. A few tell-tale signs of untrustworthy actions can include:

• Urgency to buy now or lose out on a “great deal forever.”
• Pushy sales tactics either in-person, over the phone or via email.
• “Too good to be true” advertisements on social media.

Be cautious of unsolicited conversations or websites where the sender is asking for any form of payment upfront, including a credit card or debit card. If you’ve never heard of this person, company, or product, don’t put down any money. Instead, do some further digging to determine how legit the offer is.

When shopping online, pay attention to website or email design and grammar. For example, is the email poorly written with spelling mistakes? Does the website look half complete and lack the secure icon in the address bar? Is the company name misspelled, or does it have a logo that is incredibly similar to a legitimate business you know and trust? If any of these are true, it’s best to stay away and not give them your credit card information. 

Skip the Credit Card for Cash Advances

Many credit cards offer a cash advance feature, where you can withdraw cash from an ATM against your credit limit. Although it may seem like a quick way to defer payment on something you want right now, it can come with major issues you may not see coming.

If your credit card offers a cash advance, it’s most likely at a separate, higher interest rate. In addition, a cash advance comes with fees from both the credit card side and where you are getting the money from – which makes the transaction even more expensive. If you need cash in a hurry, getting it from a credit card is an unwise idea.

But what if you need quick access to extra cash today? SESLOC Instant Funds¹ is an option available to members. Our two affordable small-dollar loans are available to all members in good standing for more than 90 days. Both loans come with a fixed APR and close-end terms, ensuring that you know your monthly payment and length of the loan upfront.

Plus, our extended ATM network is also an option if you need to withdraw cash. In addition to our 11 locations along the Central Coast, SESLOC members have access to nearly 30,000 fee-free CO-OP ATMs nationwide, including other credit unions, at 7-Eleven stores, and Costco locations.

SESLOC believes that everyone should have access to the tools and knowledge to help them avoid major money pitfalls, like debt or scams. Members have access to monthly webinars, educational materials on debt management from our partners at GreenPath Financial Counseling, and active fraud monitoring on credit and debit cards. And if the worst should happen, HomeFREE checking account members have access to identity theft programs², including help from a privacy advocate, to get things back on track. It’s just one way we help members save more.

1: All loans subject to approval and underwriting criteria, including eligibility and banking and membership history; not every applicant will qualify. Members with an open Workout and/or Repayment loans are not eligible to open an Instant Funds loan. If approved, funds will automatically be deposited into the account selected during the application process. The due date selection and automatic monthly payment pre-authorizations occur at the time the loan is booked. Depending on the due date selected, the first payment date may be less than or more than 30 days from funding. The automatic payments will be debited from the same account the loan proceeds were deposited into. The entire payment amount must be available in the account for the payment to process. Payments received 15 days after the due date are subject to a late charge. Payday Loan Payment Example: A $2,000 loan, at 28.00% APR for 12 months would have an estimated monthly payment of $193.64. Life Event Loan Payment Example: A $3,000 loan, at 18.00% APR for 36 months would have an estimated monthly payment of $109.22.

2: Identity theft insurance is underwritten by Lyndon Southern Insurance Company, a member of the Fortegra family of companies. The information provided is a program summary. Please refer to the Identity Theft Expense Reimbursement Evidence of Coverage forms for additional information including details of benefits, specific exclusions, terms, conditions and limitations of coverage. Coverage is currently not available to residents of the state of New York and may not be available in other U.S. territories or jurisdictions in the future. For Evidence of Coverage for Identity Theft Expense Reimbursement Insurance, visit sesloc.nxgstrategies.com.