What You Should and Shouldn’t Pay Using Your Credit Card

Credit cards provide users with several conveniences. Some people apply for one to build their credit score. Through proper use, they can improve their credit score to get better credit cards with no annual fees, loan rates, and repayment terms.

There are also individuals who look for cashback credit cards or those that offer air miles or similar rewards. With these types of credit cards, the more you use your credit card to pay, the higher the rewards you receive.

A credit card is a financial tool, and as with other types of tools, it has to be used responsibly. Irresponsible use and spending can lead to debts and even bankruptcy.

So, how should you use your credit card? When is the best time to use it? Are there instances where paying with a credit card is not recommended?

Here is a useful list of the best and worst situations for using your credit card.

Best things to pay for with your credit card

Big-ticket home appliances

Major appliances and electronics such as your refrigerator, oven, or laptop are better off being paid with your credit card. This is because some of the major credit card companies offer extended warranties of up to a year in addition to your manufacturer’s warranty. If you do own a credit card that provides this benefit, this can help you save on repair costs if your appliance or device breaks down once the manufacturer’s warranty has lapsed.

There are also credit cards that offer price protection. What this means is if your appliance or device goes on sale, your credit card company may refund the difference. Check the terms and conditions of your credit card when it comes to these types of purchases to ensure that you can avail of these benefits.

Business inventory and expenses

Some companies offer specialized credit cards for businesses that can become invaluable for entrepreneurs if used properly. Much like owning a personal credit card, using a business credit card allows your brand to build and increase its credit score. With a better credit score, you can enhance your company’s chances of getting a loan in the future.

There are credit cards that provide users with cashback rewards. In the case of your business, the rewards can be used to improve cash flow or reduce expenses.

Another benefit to getting and using a business credit card is that it makes it easier to keep track of expenses. This makes it easier to do a full accounting and pay taxes at the end of the fiscal year.

Travel expenses

One of the most popular reasons people sign up for a credit card is for the cashback or travel miles. If you are a frequent traveler, you can use your credit card to purchase individual or business tickets and reap the rewards. In the case of airline miles, you can use the accumulated miles or points to get a discount on future ticket purchases.

Some credit cards also offer travel insurance or accidental death coverage. This comes in handy whether you are traveling domestically or internationally. You may also receive additional perks such as access to airport lounges or concierge services.

Worst things to charge your credit card

Cash advances

Paying for major home appliances and electronics using a credit card may offer several benefits but getting a cash advance to pay for those purchases is a no-no. The interest rates and fees on cash advances are way higher than using your credit card to purchase the item directly.

Only get a cash advance in emergency cases. If you feel you will need a cash advance for any emergencies, shop around for the best credit card. Compare before you sign up to ensure you get one that offers the lowest interest rates and fees on cash advances.

Car or home mortgages

There are mortgage companies that will allow you to repay your loans using your credit card. However, just because you can doesn’t mean you should.

Credit card interest rates and fees are often higher than any loan offered by a bank or financial institution. A more practical option is to look for car dealers that offer a zero percent down deal.

Tuition fees

When your funds are low, it can be tempting to use your credit card to pay for your college tuition. Only do so if you have a steady job that pays more than enough to cover the school expenses. Furthermore, some schools add a convenience fee for using your credit card, which is neither practical nor convenient.

With these tips in mind, you have a better idea about which purchases would be more practical using your credit card. In general, never charge anything that you cannot afford to pay back before the deadline. Otherwise, you might end up paying more than what you bargained for. 


Deepak Kumar is a Co-Founder of SoulWallet, a neutral comparison portal for consumer financial services. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, the company helps customers make the best choices when shopping for financial products such as credit cards and loans.